Zheng v Minister for Immigration

[2010] FMCA 914

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ZHENG v MINISTER FOR IMMIGRATION & ANOR [2010] FMCA 914

MIGRATION – Application to review decision of Administrative Appeals Tribunal – cancellation of business skills visa – meaning of “business” and “eligible business” in s.134 of the Migration Act.

Migration Act 1958 (Cth), ss.134, 135

Basuki and Ors and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 630
Hope v The Council of the City of Bathurst (1980) 144 CLR 1; [1980] HCA 16
Ibrahim v Minister for Immigration and Citizenship [2009] FCA 1328
Liang v Minister for Immigration and Citizenship and Another (2009) 175 FCR 184; [2009] FCA 189
Nassif v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 129 FCR 448; [2003] FCA 481
Puzey v Commissioner of Taxation (2003) 131 FCR 244; [2003] FCAFC 197

Repatriation Commission v Warren (2008) 167 FCR 511; [2008] FCAFC 64

Applicant: XING ZHENG

First Respondent: MINISTER FOR IMMIGRATION & CITIZENSHIP

Second Respondent: ADMINISTRATIVE APPEALS TRIBUNAL

File Number: SYG 1243 of 2010

Judgment of: Barnes FM

Hearing date: 1 October 2010

Delivered at: Sydney

Delivered on: 26 November 2010

REPRESENTATION

Counsel for the Applicant: Mr L Karp

Solicitors for the Applicant: Kinslor Prince Lawyers

Counsel for the Respondents: Mr J A C Potts

Solicitors for the Respondents: DLA Phillips Fox

ORDERS

1. The application be dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 1243 of 2010

XING ZHENG

Applicant

And

MINISTER FOR IMMIGRATION & CITIZENSHIP

First Respondent

ADMINISTRATIVE APPEALS TRIBUNAL

Second Respondent

REASONS FOR JUDGMENT

Background

1. On 21 May 2004 Mr Zheng applied for a Business Skills Talent (Migrant) (Class EA) (Subclass 132) visa.  He was granted the visa on 29 September 2005.  Mr Zheng’s visa was cancelled on 6 May 2009 by a delegate of the first respondent.  He sought review of the cancellation decision by the Administrative Appeals Tribunal.  On 15 April 2010 the Tribunal affirmed the delegate’s decision.  Mr Zheng now seeks judicial review of the decision of the Tribunal. 

2. At the time of his visa application, Mr Zheng, a citizen of China, was the general manager of and had a substantial interest in companies in China including a company involved in the development, production and sale of meat and seafood products. 

3. As detailed in a statement made for the purposes of the Tribunal review, Mr Zheng first entered Australia on 2 April 2004 to research business opportunities.  He acquired a 60 per cent shareholding in and became a director of Kase Group Pty Ltd (Kase) a company registered on 7 April 2004.  He planned to use Kase to conduct a business involving the production of pork and chicken products in Australia for export to China.  

4. According to the Tribunal, Mr Zheng pursued his business plan through 2005 and 2006, making occasional brief visits to Australia.  However by early 2007 he decided that this proposal was not viable because, among other reasons, the Australia-China Free Trade Agreement did not allow trade in chicken and pork.  In 2008 he was occupied with his business in China. 

5. On 22 December 2008 a delegate of the Minister notified Mr Zheng of an intention to cancel his visa.  Mr Zheng was given the opportunity to respond.  In March 2009 Mr Zheng advised the Department of Immigration that he was investigating the feasibility of setting up a business in Australia to market a brand of cream puffs or sweets popular in Asia (apparently by establishing a franchise business).  On 8 April 2009 a migration agent/solicitor for Mr Zheng advised the Department that Mr Zheng had recently been negotiating with the Hindmarsh Group (Hindmarsh) a Canberra-based property developer to invest in the Bellerive retirement village project in Woden, Australian Capital Territory. 

6. It appears that in April 2009 Mr Zheng was introduced to Stephen Hardy, executive officer of Hindmarsh, a group of companies with interests throughout Australia, including property development and operation of retirement villages and nursing homes.  On 7 April 2009, Mr Zheng and Mr Hardy signed a letter of intent between Woden Retirement Developments Pty Ltd (Woden) and Mr Zheng in relation to the Bellerive retirement village project.  At that time construction of the village had commenced and some contracts for sale had been exchanged, with the first stage units to be available in late 2009.  It was agreed in principle that Mr Zheng would invest $A1 million in Woden and that he would obtain a 10.75 per cent share in the development entity via a Woden Shareholders Agreement. 

7. It was also agreed that Mr Zheng would take an active role at a senior level and would become a director of Woden.  Among other responsibilities (such as reviewing progress reports on design, authority approvals, funding, construction, marketing and project completion) he would seek Chinese residents for the village; advise on design and financing aspects to suit Chinese buyers; introduce ACT organisations such as Hindmarsh to retirement industry opportunities in China; and assist Hindmarsh in the procurement of materials for this and other projects in Australia.  On or about 24 April 2009 Mr Zheng transferred $A1 million to Woden. 

8. Mr Zheng’s agent made submissions to the Department about Mr Zheng’s activities in Australia, including in relation to Woden and its Bellerive retirement village project and also about the franchise proposal.  However Mr Zheng’s visa was cancelled on 6 May 2009.  He sought review by the Tribunal and provided it with a chronology of events and supporting documentation. 

The law

1. The grounds for cancellation of a business visa are specified in s.134(1) of the Migration Act 1958 (Cth) (the Act) as follows:

   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 following provisions in s.134 are also relevant:

   (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 - 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).

   …

   (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.

   …

   "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.

   …

The Tribunal proceedings and decision

1. Mr Zheng attended a Tribunal hearing on 9 April 2010.  The transcript of the hearing is in evidence as an annexure to an affidavit of David John Prince sworn on 20 September 2010. 

2. In the applicant’s statement of facts and contentions prepared for the Tribunal and in oral submissions to the Tribunal it was submitted for Mr Zheng that he had a substantial ownership interest in Woden, that his involvement in the Bellerive project was through Woden and that Woden was an eligible business within s.134 of the Act (transcript of Tribunal hearing pages 39 – 44).

3. At the Tribunal hearing Mr Hardy gave evidence which was summarised by the Tribunal as follows in its reasons for decision:

   Mr Hardy gave evidence that the Bellerive retirement village is a joint venture between Hindmarsh and the ACT Government.  Woden Retirement Developments Pty Ltd was established to facilitate some of the funds required for the project because the costs were greater than bank loans which covered only approximately 70 per cent of the project costs.  It is essentially a company that provides funding for the Bellerive project.  It has no employees and would probably be wound up once this project is completed. 

   Stage one of the Bellerive development was already well underway when Mr Zheng became involved with Hindmarsh.  Mr Hardy gave evidence that said that there are no firm plans to use Mr Zheng’s design plans in stage two, but he will be looking at them closely now that development approval has been received.  Other materials, such as light (sic), for which Mr Zheng has obtained quotes might be subject to Australian design standards and might not be used.  However, his ability to secure aluminium sheets at half the Australia price will benefit Hindmarsh projects. 

   Mr Hardy concedes that Mr Zheng could carry out all his activities from China, without a business skills visa, but says it would be a great shame given the enthusiasm Mr Zheng has developed for the project. 

   Mr Hardy gave evidence that he hopes that the valuable relationship that has been established with Mr Zheng will continue;  Hindmarsh has already made contact with the Red Cross in China to discuss retirement villages there and regard Mr Zheng as valuable to that and other projects. 

4. Mr Zheng’s oral evidence to the Tribunal was in part as follows (transcript page 21):

   From April 2009 after joining forces with Hindmarsh, I have been spending time trying to get familiar with all the businesses that Hindmarsh has.  I spend more time trying to understand the construction material and the related costs that Hindmarsh has as part of their business.  I also visited some of the aged care residential units that Hindmarsh was managing.  I also advised on landscape design.  Currently, I’m doing market research for Hindmarsh, stage 2, construction work.  Sorry, just I may add, that was on construction-related material and costs – sorry, on the basis of the information – based on the costs information that I obtained recently.  I found that the expenses on construction material, the cost has decreased quite a lot in comparison with the stage 1 project.  So I spent some time, a week, in trying to understand, as well as handle matters related to Hindmarsh. 

5. The Tribunal summarised Mr Zheng’s evidence that he now spent on average two to three days each week “on Hindmarsh-related activities”, that he had participated in two Woden board meetings and was researching and learning about Hindmarsh’s business, including construction materials and costs.  It recorded that he attended the opening of stage one of the Bellerive development and had visited retirement villages in China that Hindmarsh might manage.  He claimed he had advised Hindmarsh on landscape design for stage two of the Bellerive development (although his suggestions were still being considered) and had obtained quotes from Chinese suppliers for the Bellerive project. 

6. Mr Zheng’s evidence was that he wanted to continue to be involved with Hindmarsh, was interested in further investment opportunities and was of the view that there was a potential for Hindmarsh to get into the Chinese market for retirement villages.  He intended to recommend to Hindmarsh that Woden be the investment vehicle.  Although Mr Zheng conceded that he could help Hindmarsh in China without the business skills visa, he claimed that the visa made “things a lot easier and more convenient”. 

7. The Tribunal first determined that facts and circumstances after the date of the visa cancellation could be taken into account.  No issue is taken with this finding. 

8. After summarising Mr Zheng’s evidence about his activities in Australia and his intentions, the Tribunal recorded that Mr Zheng’s application relied on his involvement in Woden, that he was “no longer pursuing his original plan for a meat business” and that he relied on his involvement in Kase “only insofar as it supported his claim to have made genuine efforts to obtain the necessary business interests in Australia” (that is, under s.134(2) of the Act).

9. As set out above, the Tribunal summarised Mr Hardy’s evidence, including the fact that Hindmarsh was a “diverse group of companies”, Bellerive was a joint venture between Hindmarsh and the ACT Government and Woden was established “to facilitate some of the funds required for the project” and that it was:

   … essentially a company that provides funding for the Bellerive project.  It has no employees and would probably be wound up once this project is completed.

10. The Tribunal then considered whether Mr Zheng had obtained a substantial ownership interest in an eligible business (see s.134(1)(a) and the s.134(10) definitions of “ownership interest” and “eligible business”).  It was satisfied that Mr Zheng had a substantial ownership interest in Woden, having regard to his 10.75 per cent shareholding based on his investment of approximately $A1 million which was said to give him “an ability to control or manage the business of that company”. 

11. However the Tribunal found in these circumstances that for Mr Zheng’s application to succeed Woden “must first be carrying on business, and that business must be eligible within the meaning of the Act”.  It referred to the fact that the term “business” was not defined in the Act, but found that as stated in Hope v The Council of the City of Bathurst (1980) 144 CLR 1; [1980] HCA 16 per Mason J at [14], the notion denoted “activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis”. 

12. The Tribunal acknowledged that whether a person is carrying on business will depend on the facts and circumstances, that size was not determinative and nor was whether a person was engaged in other activity such as full time employment.  It referred to the remarks of Hill and Carr JJ in Puzey v Commissioner of Taxation (2003) 131 FCR 244; [2003] FCAFC 197 (at [47] – [48]) as follows:

    It will be relevant in deciding whether a business is carried on that there is some repetition of acts and that the activities in question have “something of a permanent character”; Hope per Mason J at 8. What is required is that activities be engaged upon “on a continuous and repetitive basis”; Hope at 9. However, perhaps not too much attention should be given to the concept of repetition where the activity is one, such as plantation operation, where the activity will continue over a relatively long period of time but where there will be significant periods of what may be referred to as inactivity. Business does not mean being busy.

    In deciding whether or not a business is carried on, courts have pointed to what have been called in the United Kingdom the “badges of trade”, indicia which, while no one of them will be determinative of whether a business is carried on, collectively will demonstrate a business.  These include the profit motive (although a non-profit company may still carry on a business), acting in a business-like way (although many businesses may be found which operate in a non business-like way), the keeping of books of account and records (although the fact that there are none will not necessitate the conclusion that a business is not carried on), and repetition (although a fixed term project may still be a business). 

13. The Tribunal concluded that “[e]ven given its broadest reading” Woden did not carry on a business.  It had regard to the absence of any “evidence of anything that [Woden] “conducts” or “carries on””, the fact that it had no “activities”, that there was “no evidence of a business plan and no evidence of financial affairs or of anything else that require[d] management in any real sense”.  It also referred to the fact that Woden had no employees and that, other than formalities such as notification to the Australian Securities and Investments Commission of its directors and the issue of share certificates, minutes of Woden’s board meetings did not disclose any business of Woden but rather “record Hindmarsh’s activities and, in particular, progress of stage two of the Bellerive development”. 

14. The Tribunal found that the conclusion that Woden was “essentially a facility to enable funding for the Bellerive development” was supported by Mr Hardy’s evidence that “it will probably be wound up at the end of the Bellerive development” and concluded that “[i]t is essentially a vehicle for investment in Hindmarsh’s Bellerive project”. 

15. The Tribunal was satisfied on the evidence before it that Woden was “not carrying on a business” and that it followed that it could not be carrying on an “eligible business” as defined in s.134(10) of the Act.

16. The Tribunal then addressed the fact that there was evidence that other entities of the Hindmarsh Group may satisfy the definition of “eligible business” because they were resulting, or would result, in the development of business links with the international market or the creation or maintenance of employment in Australia (see paragraphs (a) and (b) of the definition of “eligible business” in s.134(10) of the Act). It also had regard to evidence that during the first phase of construction of the Bellerive development 63 people were employed by Hindmarsh, that ongoing employment would be created in the retirement facility itself and that it appeared that Hindmarsh may develop further business links in China through Mr Zheng. However it found that “[t]hat does not alter that Mr Zheng’s ownership interest is in a different entity.”

1. Nonetheless, the Tribunal continued:

   I have considered whether the relationship between Woden Pty Ltd and Hindmarsh is such that they are effectively the same such that it would be hair-splitting to draw a line for the purpose of Mr Zheng’s application.  However, the evidence is clear that they are not.  Merely because they are aligned as they are is not sufficient to say that Mr Zheng has the interest required by the Act.  He no (sic) management role or formal involvement with the other Hindmarsh entities that are involved in the construction and future management of the Bellerive development.  Naturally, as an investor, Mr Zheng is keenly interested in Hindmarsh’s activities but merely because he follows them closely does not alter the character of the entity in which he has an interest, or the nature of his involvement with Hindmarsh. 

2. The Tribunal concluded that there was a ground for cancelling Mr Zheng’s visa under s.134(1)(a) of the Act.

3. It then had regard to whether it was nonetheless satisfied that Mr Zheng met the “genuine efforts” criteria in s.134(2) of the Act, having regard to the non-exhaustive list of factors in s.134(3) which may be taken into account in determining whether a genuine effort had been made.

4. However the Tribunal concluded:

   The difficulty for Mr Zheng is that, while he has taken an active interest in the Bellerive development and the activities of the Hindmarsh Group generally, his ownership interest has been limited to Woden Pty Ltd.  It follows that his efforts have not been directed towards an entity carrying on an eligible business. 

5. The Tribunal observed that Mr Zheng did not press that this was a case in which it should exercise its residual discretion and found that it was not satisfied that there were grounds on which to exercise that discretion in favour of Mr Zheng.  It affirmed the decision under review. 

6. Mr Zheng sought review by application filed on 4 June 2010.  He now relies on the grounds in an amended application filed on 1 October 2010.  Counsel for the applicant confirmed that particular (c) to ground two was not pressed. 

Section 134(1) of the Act

1. The first ground in the amended application is as follows:

   The Second Respondent (the Tribunal) erred in construing and applying s.134(1) of the Migration Act, 1958. 

   Particulars

   (a) Error in equating the “business” referred to in s 134(1) with the vehicle that carries on that business. 

   (b) Error in failing to recognise that a “business” referred to in s 134(1) can be a component part of a larger project or enterprise. 

2. The applicant contended that the Tribunal made an error in construing the word “business” as used in s.134 of the Act, insofar as it had focused on the question of whether Woden was an eligible business, thus equating the word “business” in s.134 with the entity said to be carrying on the business.

3. It was said that the Tribunal had erred in considering the operation of s.134(1) of the Act, by confining its consideration of “business” to the question of whether Woden was carrying on an “eligible business” and distinguishing the entity of Woden from the activities of other entities in the Hindmarsh Group. 

4. Counsel for the applicant acknowledged that before the Tribunal, the then advocates for the applicant and Minister had also proceeded on this basis, but submitted that the fact that the error was perpetuated by the advocates for the parties before the Tribunal was immaterial as the parties did not dictate the content of the law and that if the Tribunal had erred it was for the court to correct such error. 

5. It was submitted that it was relevant to have regard to the authorities on the question of whether a Tribunal would commit legal error by not considering an issue, even if it was not raised or the subject of challenge by the parties to the proceedings before the Tribunal.  In Repatriation Commission v Warren (2008) 167 FCR 511; [2008] FCAFC 64 at [78], Lindgren and Bennett JJ referred to the principle that the court would more readily permit a matter to be raised for the first time on appeal from a Tribunal where the matter was a pure question of law or where:

   … the matter goes to a misapprehension that was shared by the parties before the tribunal and therefore by the tribunal itself … such as a shared misapprehension as to the applicable law.

   (See also Liang v Minister for Immigration and Citizenship and Another (2009) 175 FCR 184; [2009] FCA 189 at [23] citing Warren)

6. It was contended that this was what had occurred in the present case, in that the Tribunal, following the approach taken by the parties, had identified the business not as an enterprise, as it should have done, but rather with the particular entity which carried it out.

7. The applicant submitted that while the Tribunal dealt with the argument that was put to it, it was dealing with an incorrect argument and that the proper way of looking at the circumstances was indicated by the following submission of then counsel for the applicant to the Tribunal (transcript page 39):

   When he says he’s doing things for Hindmarsh, what he’s really doing is he’s really working as a director of Woden Retirement Developments, which is mixed up in the entire global project of the Bellerive development.  I think the highest I can put it is that he’s working – if he wasn’t a director and shareholder of Woden Retirement Developments, then he wouldn’t be doing any of these things, so what he’s doing from day to day is he’s doing what he has to do to maintain the management of Woden Retirement Developments, which is probably not much.  Then indirectly as an officer of that company, he’s working day to day, two to three days a week, on the Bellerive development …

8. In other words it was submitted that there was evidence before the Tribunal that Mr Zheng was working on the Bellerive project as an enterprise.

9. It was submitted that it could not be said that the Tribunal had in fact considered a larger enterprise in considering the relationship between Woden and Hindmarsh, having regard to its conclusion that the mere fact that Woden and Hindmarsh were aligned was “not sufficient to say that Mr Zheng ha[d] the interest required by the Act” and its reference to the absence of any formal arrangement with the other Hindmarsh entities involved in the construction and future management of the Bellerive development on the part of Mr Zheng.  This was said to demonstrate that the Tribunal was considering the entities rather than the enterprise.

10. It was acknowledged that (as the Tribunal had stated) the concept of “business” is not defined in the Act but, consistent with the approach taken in Hope v The Council of the City of Bathurst, denotes activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis.  However it was submitted that the Tribunal was in error in that it had in effect separated Hindmarsh and Woden and had failed to look at the project or enterprise as a whole.  Thus it was said to have considered Mr Zheng’s ownership interest, not in the project as a whole or in the enterprise, but in the particular entity of Woden. 

11. Reference was made to the approach taken in Nassif v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 129 FCR 448; [2003] FCA 481. In that case what was in issue was whether the Tribunal had erred in equating the concept of “main business” with a single business entity.  In Nassif the Tribunal had to determine whether the applicant had an ownership interest in the business said to be a main business.  In the context of considering the definition of “qualifying business” in the Migration Regulations 1994 (Cth) (as part of identifying whether a business conducted by a visa applicant was a main business as defined in the Regulations), Branson J had regard to the fact that the definition of “qualifying business” in reg.1.03 referred to an “enterprise” that met certain criteria.  In that context her Honour referred to dictionary definitions of  the concept of “enterprise” as a word of “general meaning which is broadly synonymous with “undertaking”” and suggested that had it been intended that an “enterprise” was to be limited to the commercial activities of a single legal entity, one would have expected the Regulations to say so (at [33]). 

12. Her Honour observed at [34]:

    ... It seems plainly to be intended that an “ownership interest” in relation to a business can derive from, for example, a shareholding in a company that carries on the business together with another entity. Were it not so intended, para (a) of the s 134(10) definition [of ownership interest] would presumably read: “a shareholder in the company that carries on the business.”  [Rather than “a shareholder in “a” company that carries on a business”].

13. Branson J concluded in Nassif at [35], that it was not a necessary characteristic of a “main business” for the purpose of the criterion specified by cl.845.215 of Schedule 2 to the Migration Regulations that the business be carried on by a single entity.

14. It was submitted for the applicant in this case that it was relevant that s.134(1) of the Act had regard to whether the visa holder had obtained a “substantial ownership interest in an eligible business in Australia” and that the definition of ownership interest in s.134(10) differentiated between the business and the entity which operated it. This was said to be made clear by the fact that the concluding words in the s.134(10) definition included an interest held indirectly through interposed companies, partnerships or trusts. On this basis it was submitted that, consistent with the approach in Nassif, the concept of business was not to be equated with the entity that ran it.

15. Counsel for the applicant also referred to Liang. In reviewing a decision of the Migration Review Tribunal refusing to grant a business skills visa on the basis that the visa applicant had not complied substantially with visa conditions, one issue before the Federal Court was whether for the purposes of the Migration Regulations definition of “main business” a legal entity could operate more than one business.  Relevantly, Logan J stated (at [30] and [31]) in relation to the meaning of the word “business”:

    … The word undoubtedly has chameleon like qualities, taking its meaning from the context in which it is used. In both the Oxford English Dictionary and the Macquarie Dictionary the meaning of the word “business”, when used in a commercial sense, is “enterprise”.  That is the sense in which it is used in the terms “main business” and “qualifying business” in the Regulations.  That this is so is reinforced by its being treated, in the definition of “qualifying business”, as a synonym for “enterprise”. 

    So construed, there is nothing about the meaning of the word “business” as used in the context of the Regulations which carries with it the necessary corollary that a legal entity can only ever, on its true meaning, have or conduct but one “business”.  Such a construction of the word “business” accords with common experience.  It is by no means unusual for a legal entity to cease one particular field of commercial endeavour by the disposal of what is aptly termed a “business” without ceasing altogether to trade.

16. While these cases concerned the issue of whether a legal entity could conduct more than one business, the applicant contended that, consistent with the fact that the concepts of business and entity should not be equated, the Tribunal erred in this instance because it did not consider Mr Zheng’s work as part of an enterprise, the Bellerive project, but rather equated the business with Woden.   

17. The applicant also contended that the Tribunal had made a related error in failing to recognise that the “business” referred to in s.134(1) of the Act could be a component part of a larger project or enterprise. It was submitted that in considering whether the relationship between Woden and Hindmarsh was such that they were effectively the same, the Tribunal had erred in focusing on the fact that the entity in which Mr Zheng had an interest was Woden and concluding:

    Naturally, as an investor, Mr Zheng is keenly interested in Hindmarsh’s activities but merely because he follows them closely does not alter the character of the entity in which he has an interest, or the nature of his involvement with Hindmarsh.

18. It was submitted that this involved asking the wrong question and that the Tribunal had not considered that an ownership interest in relation to a business could derive from, for example, a shareholding in the company that carried on the business together with another entity (see Nassif at [34]). Such an issue was said to be plainly relevant in the circumstances of this case, given the evidence that Woden operated as the joint venture company and financier and that without Woden the Bellerive project could not have obtained finance. It was submitted that in this sense the business of Woden was to permit the enterprise to proceed and in that respect Mr Zheng’s continuing contribution to the enterprise could not be separated from his interest in Woden. However the Tribunal was said to have failed to consider that a business could be part of an enterprise and could have a symbiotic relationship with a bigger project.

19. However, as the first respondent submitted, it has not been established that the Tribunal erred in construing and applying s.134(1) of the Act. It is important to bear in mind that the Tribunal finding in relation to s.134(1) was that there was a ground for cancellation under s.134(1)(a) which applies if the decision maker is satisfied that the visa holder “has not obtained a substantial ownership interest in an eligible business in Australia”. 

20. It is the case that in Nassif Branson J concluded (as pointed out in Liang at [15]) that it was “not a characteristic of the meaning of the word “business” that a business could only be carried on by one legal entity”.  Jagot J summarised the relevant findings in Nassif and Liang in Ibrahim v Minister for Immigration and Citizenship [2009] FCA 1328 (at [27]) as follows:

    …In Nassif Branson J found that the Tribunal had erred in its approach to the identification of the business because it treated that description as necessarily involving a single entity only.  While the applicant in that case had identified one business name in the application form the accompanying documents showed his involvement in numerous companies.  His submissions contended that the applicant’s business was transacted through at least four companies.  Branson J found that the Tribunal erred by failing to deal with the applicant’s case as put on the basis that a business may involve more than one legal entity.  In Liang Logan J held that a single legal entity may conduct more than one business.  Neither case turned on a conclusion that the Tribunal had taken into account irrelevant considerations.

21. While Nassif, Liang and Ibrahim concerned issues other than those before the Tribunal in this instance (relating as they did to applications for visas, not cancellation of a visa), these cases do address the scope of the concepts of “business” and “ownership interest” in s.134 of the Act. However, consistent with the approach taken in those cases that a business and the legal entity that carries on a business are not to be equated (as “a business is not a legal entity but, rather, is an enterprise or undertaking” as Jagot J stated in Ibrahim at [30]) and accepting for present purposes that a business within s.134(1) can be a component part of a larger project (as the applicant submitted), it has nonetheless not been established that the Tribunal erred in the manner contended for in ground one of the amended application.

22. First, in this case, as in Ibrahim, the Tribunal dealt with the applicant’s case as put to it (at [30]). Having regard to the provisions of s.134, in practical terms it was open to the applicant in his dealings with the delegate (particularly in representations in response to the s.135 notice of proposed cancellation) to articulate what he claimed was an “eligible business” for the purposes of s.134 of the Act and to make contentions in this respect to the Tribunal. The applicant’s submission to the Tribunal was that Woden was an eligible business. The requirements of ss.134(1) and (2) were addressed in relation to the applicant’s involvement in Woden. The Tribunal considered these claims. Ultimately it was a question of fact for the Tribunal as to whether or not the business that the applicant said he was involved in was an eligible business within the meaning of s.134. The Tribunal understood that Mr Zheng’s application relied on his involvement in Woden.

23. Where an applicant claims to the Tribunal that a business is conducted through a particular entity, the Tribunal is entitled to consider the ownership structure of that entity in addressing s.134(1)(a) (and see in a different context Ibrahim at [32]). Such consideration is not of itself indicative of an error of construction or application of the law in the sense contended for by the applicant.

24. Further, insofar as the applicant contended that the notion that Woden was the “business” relied on by Mr Zheng reflected a misapprehension on the part of the parties that was shared by the Tribunal, that equated a business with a legal entity, while the Tribunal may commit legal error by not considering an issue not explicitly raised or not the subject of challenge by the parties before it, as discussed in Liang by reference to the principles in Warren (being bound to apply the provisions of the relevant statute), in this case the Tribunal has not fallen into such jurisdictional error. 

25. The evidence before the Tribunal that was relied on by the applicant not only focused on Woden being synonymous with his business but also drew a distinction between Woden and the broader Hindmarsh group of companies.  The evidence before the Tribunal from Mr Hardy was that the Hindmarsh group of companies consisted of a lot of separate companies and that the group’s activities were diverse, including operation of several retirement villages, car parks, venture capital and construction.  Mr Hardy outlined the separate roles of the Hindmarsh Group and Woden and the involvement of the ACT Department of Disability, Housing and Community Services in the Bellerive development project, indicating that this was a development which was a discrete part of a very large group of companies. 

26. When asked whether he would describe Woden as an entity Mr Hardy had responded that Woden was “a company that has provided funding for this particular Bellerive project” (transcript page 8). He explained that the funding had come from Mr Zheng and another individual and that the total project was also funded by the banks (transcript page 8). He confirmed that Woden, as an entity, was not an employer of persons and that there were separate construction contractors and that other specialist entities owned by Hindmarsh (such as ACT Retirement Services) were involved in the ongoing running of the retirement village. The evidence was that shares in Woden were owned by Hindmarsh Woden Development Pty Ltd (73.25 per cent), Mr Zheng (10.75 per cent) and another Chinese director (16 per cent). There was no evidence of any other investment by Mr Zheng in the Hindmarsh group or of any interest held through Woden in other Hindmarsh entities in the sense referred to in the s.134(10) definition of ownership interest. Importantly, Mr Zheng’s evidence was that he had no present involvement in such other Hindmarsh entities.

27. When asked whether it was correct that “Woden itself has been set up for the construction of the Bellerive project, which is, of course, only one of many proposals and projects that Hindmarsh has going at the moment”, Mr Hardy responded “Yes”, indicating that “…any different project has a, you know, separate entity.  We don’t do it all under a single umbrella company, as it were” (transcript pages 8 – 9).

1. Although Mr Zheng’s evidence was that he intended to recommend that Woden be the vehicle for any Hindmarsh expansion into projects in China, Mr Hardy confirmed that once the Bellerive project was completed it was probable that Woden would be wound up, although he hoped the relationship with Mr Zheng would continue, as Hindmarsh wanted to establish retirement villages in China. 

2. The clear tenor of Mr Hardy’s evidence was not only that the Bellerive project was but one small part of the projects in which the Hindmarsh Group was involved, but also that Mr Zheng’s involvement had been limited to his involvement with the Woden company, although Hindmarsh was interested in “Mr Zheng and what he can bring” (transcript page 9) in relation to the future proposals in China or involving the supply of materials from China. 

3. Consistent with this evidence, the applicant’s submission to the Tribunal was that Mr Zheng had a substantial ownership interest in Woden and that Woden was a business.  Mr Zheng’s submission to the Tribunal addressed the issue of whether a property development project was sufficient to amount to ongoing or repetitive conduct so as to amount to a business in the context of the submission that the sort of development in which Woden was involved should not be seen as a single, short-term development and that there was sufficient ongoing activity in Woden for it to amount to a business, as it had been incorporated for the purpose of making a profit and given Mr Zheng’s intention to use Woden as a vehicle for future plans to expand into the Chinese market.  

4. The presiding member of the Tribunal put to counsel for the applicant the evidence of Mr Hardy that Woden was essentially a sort of facility to facilitate funding and that it was not clear how it was a company that required management.  As set out above, counsel for the applicant had submitted that Mr Zheng’s involvement in Hindmarsh was working as a director of Woden which was “mixed up in the entire global project of the Bellerive development”.  It was conceded that maintaining the management of Woden was “probably not much” but submitted that (transcript page 39):

   indirectly, as an officer of that company, he’s working day to day, two to three days a week, on the Bellerive development.  I think that’s the highest I can put it.

5. In light not only of the manner in which the case was framed, but also the evidence before the Tribunal, it has not been established that the Tribunal fell into error in its reasons for decision in the manner contended for by the applicant. It recorded its understanding that Mr Zheng’s application relied on his involvement in Woden and referred to Mr Hardy’s evidence. The Tribunal dealt initially with the applicant’s case as it was put. This did not betray any relevant misunderstanding of the meaning of s.134 or the concept of business within that section.

6. The Tribunal’s satisfaction that Mr Zheng had a substantial ownership interest in Woden was consistent with and reflected the way in which the case was put to the Tribunal.  It was in that context that the Tribunal found that Woden did not carry on a business, that it was essentially a facility to enable funding for the Bellerive development, that is, a vehicle for investment in Hindmarsh’s Bellerive project, and that as it was not carrying on a business it followed that it could not be carrying on an eligible business.  Such an approach does not reveal a jurisdictional error in the manner contended for in ground one of the amended application. 

7. Moreover the Tribunal did not equate the notion of business with the vehicle that carries on that business or impermissibly limit the notion of business or fail to recognise that a business could be part of some larger enterprise and was not necessarily confined to what was done by some particular company.  This is apparent from its express consideration of the possibility that Mr Zheng’s ownership interest was in a business other than Woden, such as other “entities” involved in the Bellerive development. 

8. In considering whether Mr Zheng had obtained a substantial ownership interest in an eligible business, the Tribunal referred to the fact that while “ownership interest” was defined in s.134(10) of the Act, there was no definition of substantial ownership interest. The Tribunal agreed with the approach taken in the earlier Tribunal decision in Basuki and Ors and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 630 at [32], that in the context of s.134 “substantial” indicated:

   … the degree of ownership of a company or a business in the sense of ability to control or manage the business, and also the absolute monetary value of the interest.  …a degree of ownership of and investment in the business in a relative or value sense that is not insubstantial or nominal.

9. The Tribunal’s adoption of that passage from Basuki is significant.  Basuki distinguished between a degree of ownership of “a company or a business”. This does not suggest that the Tribunal was automatically equating the business it was required to consider under s.134 of the Act with the entity or vehicle that carried on the business.

10. Nonetheless, having regard to the fact that Mr Zheng was concerned to demonstrate that he had obtained a substantial ownership interest in an eligible business (which he identified as Woden), it was clearly of relevance for the Tribunal to have regard to ASIC documents which showed that Mr Zheng was one of five directors of Woden and owned 10.75 per cent of the shares, based on his investment of approximately $A1 million.  This was the material Mr Zheng relied on to demonstrate a substantial ownership interest in an eligible business.  The Tribunal was satisfied that Mr Zheng had a substantial ownership interest in Woden.  Importantly, there is no suggestion or basis in the material before the Tribunal for any claim that Mr Zheng had a substantial ownership interest in the business consisting of the global Hindmarsh group or some other Hindmarsh entity based on any other investment or through any interest held by Woden in the sense referred to in the definition of “ownership interest”.  There was no evidence or claim that Mr Zheng had any ownership interest, either directly or through Woden, in any other business associated with Hindmarsh other than his interest in Woden.  Rather, the business in which Mr Zheng asserted he had an ownership interest was a business that was, the Tribunal found on the facts before it, one that was carried out by Woden. 

11. Notwithstanding this, the Tribunal went on to refer to the fact that there was evidence that other entities in the Hindmarsh group may satisfy the definition of “eligible business” in the Act, having regard to employment of people by Hindmarsh, the fact that the ongoing employment would be created in the retirement facility itself and that Hindmarsh may develop further business links in China through Mr Zheng. However, consistent with the wording of s.134(1)(a) of the Act, the Tribunal pointed out that this did not alter the fact that Mr Zheng’s ownership interest was in a different entity. In other words, even if other entities in the Hindmarsh group were or may be eligible businesses, what was relevant as a ground for cancellation under s.134(1)(a) was whether Mr Zheng had obtained a substantial ownership interest in an eligible business. The Tribunal recognised this.

12. Further it went on to consider whether the relationship between Woden and Hindmarsh was such that they were effectively the same, such that it would be “hair-splitting” to draw a line for the purpose of Mr Zheng’s application.  This is not inconsistent with a recognition that a business should not necessarily be equated with an entity and may be a component part of a larger enterprise.  However the Tribunal reached a conclusion on the facts that they were not.  This involved a conclusion that Mr Zheng did not have a substantial ownership interest in other Hindmarsh interests based on his interest in Woden.  Thus, the Tribunal found that Woden and Hindmarsh were not effectively the same and that merely because they were “aligned” was not sufficient to say Mr Zheng had “the interest required by the Act”.  Read in context, this is clearly a reference to a “substantial” ownership interest, consistent with the fact that the Tribunal considered whether Mr Zheng had an ability to control or manage a wider business (as considered in Basuki).  It found however that he had “no management role or formal involvement with the other Hindmarsh entities that are involved in the construction and future management of the Bellerive development.”  The Tribunal had regard to his investment in Woden and keen interest in Hindmarsh’s activities but found that this did not alter the character of the entity in which he had an interest (that is a substantial ownership interest) or the nature of his involvement with Hindmarsh. 

13. This reasoning is, as the first respondent submitted, entirely destructive of the applicant’s first ground of review. The Tribunal accepted the possibility that the business in s.134(1) of the Act could be something wider than Woden, albeit on an assessment of the evidence, it reached a conclusion of fact that in this particular instance was not made out.

14. Implicit in such conclusion is that if the facts had been different the Tribunal was not expressing any legal impediment to treating Hindmarsh as operating a business or to there being a business wider than the company Woden. The Tribunal did not equate the business with the vehicle that carried on business or fail to recognise that a business in the s.134 sense could be a component of a larger project or enterprise.

15. Ground one is not made out. 

Section 134(2) of the Act

1. Ground two in the amended application is that the Tribunal erred in construing and applying s.134(2) of the Act. There are three particulars to this ground, but in oral submissions counsel for the applicant advised that particular (c) to ground two, in which it was claimed that the Tribunal failed to consider his claim that his activities in connection with Kase went to whether he met the requirements of s.134(2), was not pressed. Hence, the particulars relied on in these proceedings are as follows:

   (a)    Error in finding that the “genuine effort” referred to in s 134(2) had to be in aid of an existing “eligible business”. 

   (b)    The Tribunal should have found that an attempt to create an, “eligible business” could come within the requirements of s 134(2).

2. The Tribunal set out the provisions of s.134(2) which provides that the Minister must not cancel a business visa if satisfied of certain things. It referred to the factors which may be taken into account in determining whether the visa holder has made a “genuine effort” within s.134(2) as specified in s.134(3). However issue was taken with the Tribunal’s conclusion that:

   The difficulty for Mr Zheng is that, while he has taken an active interest in the Bellerive development and the activities of the Hindmarsh Group generally, his ownership interest has been limited to Woden Pty Ltd.  It follows that his efforts have not been directed towards an entity carrying on an eligible business.

3. The applicant submitted that there was a possible ambiguity in the wording of s.134(2), insofar as s.134(2)(a) referred to an applicant having “made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia”.  It was contended that this could mean that the genuine effort had to be in relation to an existing business which was an eligible business (in which case the effort would be directed simply to obtaining the requisite ownership interest), or that it could mean that the genuine effort could be directed towards obtaining an ownership interest and developing the business to the point where it was an eligible business.  It was submitted that the Tribunal appeared to have adopted the former interpretation and that this could not be correct as the relevant parts of the Act and Regulations as a whole envisaged that a person would start a business and work towards it being eligible, not simply that he or she would attempt to buy into an existing business. 

4. Reference was made to the fact that a business visa was intended to create business, employment and overseas contacts for Australian business and not simply to obtain additional investment in existing businesses. On this basis it was submitted that insofar as the Tribunal had operated under the assumption that the business activities relevant to the question of whether the applicant had made a genuine effort sufficient to invoke s.134(2) had to be within an existing eligible business this was incorrect and contrary to policy and that the Tribunal had erred in the manner contended for in ground two of the amended application.

5. It was said that to take a contrary approach would mean that s.134(2) would have no operation unless and until an eligible business was already in operation and that this would “rob” it of almost all of its substantive benefit.

6. Subsection (2) of s.134 is in the form of a prohibition. The Minister must not cancel a business visa if the Minister (or the Tribunal) is satisfied that the visa holder has met a number of criteria (which are conjunctive and not alternatives) being that he or she has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia and 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 intends to continue to make such genuine efforts.  It is apparent that each of these criteria relate to efforts in relation to the same business. 

7. Paragraph (a) relates to a genuine effort to obtain a substantial ownership interest in an “eligible business”. In turn, eligible business is defined in s.134(10) to mean a business that the decision maker “reasonably believes is resulting or will result” in one or more of the listed alternative factors such as “the development of business links with the international market” or “the creation or maintenance of employment in Australia”. 

8. Section 134(3) sets out a non-exhaustive list of factors which may be taken into account in determining whether a “genuine effort” has been made. 

9. The language of s.134(3) is consistent with the applicant’s submission that the requirement in s.134(2)(a) may be met by genuine efforts in relation to establishing a business that is not yet eligible (although the definition of “eligible business” itself contemplates that a business that has not yet resulted in any of the benefits listed in that provision will be an eligible business if the Minister reasonably believes that it “will result” in one or more of the listed benefits). It is clear that s.134(3) permits regard to be had to a business in which the applicant is no longer involved (see s.134(3)(i)).

10. I note however that the genuine efforts that have been made by an applicant relevant for consideration under s.134(2)(a) and (b) must be in relation to the same business and under s.134(2) must be “to utilise his or her skills in actively participating at a senior level in the day-to-day management of that business”.  As the first respondent submitted, it is difficult to see how the requirements of that paragraph could be met in a business that did not exist prior to or at the time the cancellation of a visa was in issue (notwithstanding that the visa may have originally been granted on the basis of a bare proposal to establish a business).  On this basis the Tribunal did not fall into error. 

11. However even if s.134(2) could be satisfied in relation to efforts to create an eligible business, the Tribunal did not proceed on the basis that it could not and did not find that the “genuine effort” in s.134(2) had to be in aid of an existing business in all circumstances.

12. In this instance the Tribunal properly referred to s.134(2) and the factors in s.134(3) and to the meaning of “genuine” in that context (as an effort that is more than “superficial or token”). It acknowledged that Mr Zheng had taken an active interest in the Bellerive development and the activities of the Hindmarsh Group generally but, consistent with the language of s.134(2) had regard to the fact that his ownership interest has been limited to Woden in finding that Mr Zheng’s efforts (to obtain a substantial ownership interest) had not been directed towards an entity carrying on an eligible business.

13. This conclusion has to be seen in light of the material before the Tribunal. There was no evidence of any effort on the part of Mr Zheng to obtain any ownership interest in a business other than or wider than Woden in the sense described in the definition of ownership interest in s.134(10) of the Act, which refers to a direct or indirect interest as a shareholder, partner or sole proprietor except insofar as that was established by his interest in Woden. His general “active interest” in the Bellerive development and the activities of the Hindmarsh group generally were not such as to satisfy the Tribunal that he had made “efforts” directed towards obtaining a substantial ownership interest in any “eligible business” in the s.134(10) sense. There was no suggestion of any future eligible business in relation to which Mr Zheng had made any efforts to obtain a substantial ownership interest.

14. The Tribunal’s conclusion in this respect must be seen in light of its earlier view that while Mr Zheng had taken an active interest in the Bellerive development and the activities of the Hindmarsh Group generally, this did not constitute a substantial ownership interest and also that his ownership efforts had not been directed to such other entities. As indicated, the requirements of s.134(2) are cumulative. It was open to the Tribunal to find that s.134(2)(a) was not met on the evidence before it. This does not demonstrate that the Tribunal necessarily proceeded on the basis that an attempt to obtain a substantial ownership interest in an eligible business (or even an attempt to create an eligible business) could not be considered under s.134(2) of the Act. This was not, however, the case before it.

15. The Tribunal did not limit the notion of “genuine efforts” as the applicant contended. Rather, the Tribunal correctly proceeded on the basis that under s.134(2) of the Act the genuine efforts had to relate to obtaining a substantial ownership interest in an eligible business and to utilising skills in actively participating at a senior level in the management of that business and considered the facts before it in that context.

16. Ground two is not made out. 

17. As no jurisdictional error has been established the application must be dismissed. 

I certify that the preceding ninety-one (91) paragraphs are a true copy of the reasons for judgment of Barnes FM

Date:  26 November 2010