Jones and Ors and Minister for Immigration and Citizenship [2009] AATA 11; (2009) 106 ALD 564 (8 January 2009)

Last Updated: 3 November 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 11

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2007/1643

GENERAL ADMINISTRATIVE DIVISION		) No 2007/3055 No 2007/3060 No W200703060 No 2007/3071
	Re		MICHAEL JONES AERAN JONES BRONWYN LOUISE JONES BRYAN MICHAEL JONES

Applicants

And

MINISTER FOR IMMIGRATION AND CITIZENSHIP

Respondent

DECISION

Tribunal

Ms L R Tovey, Member

Date 8 January 2009

Place Perth

Decision

The Tribunal sets aside the decisions under review and substitutes decisions that the Applicants' visas not be cancelled.

...(sgd) Ms L R Tovey.......
Member

CATCHWORDS

IMMIGRATION – business skills visa – eligible business – genuine efforts – exercise of discretion

LEGISLATION

Migration Act 1958 (Cth), s134

CASES

Abbu and Minister for Immigration and Multicultural Affairs [2006] AATA 898

Gunuwan and Minister for Immigration and Multicultural Affairs [2006] AATA 852

Harsono and Minister for Immigration and Multicultural Affairs [2007] AATA 64

Hook and Minister for Immigration and Citizenship [2007] AATA 1798

Kim v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 31; (2004) 38 AAR 304

Kok and Minister for Immigration and Multicultural and Indigenous Affairs [2005] AATA 579

Leo and Minister for Immigration and Multicultural and Indigenous Affairs [2006] AATA 308

McAlpin and Minister for Immigration and Citizenship [2008] AATA 109

REASONS FOR DECISION

8 January 2009

Ms LR Tovey, Member

1. This is an application for review of a decision made by a delegate of the Respondent on 4 April 2007 cancelling the business skills (sub-class 128) visas of Mr Michael Jones, his wife Mrs Aeran Jones and their children Bronwyn Louise Jones and Bryan Michael Jones. It is convenient to refer to Mr Michael Jones simply as Mr Jones and to refer to the other members of his family by their Christian and surnames.

RELEVANT FACTS

2. I find the following facts from the statement and evidence of Mr Jones, exhibits referred to in his statement and the Section 37 Documents. I do not understand these primary facts to be in contention between the parties.
3. Prior to moving to live in Australia, Mr Jones and his family resided in Zimbabwe, where Mr Jones worked for merchant company in the tobacco industry. Prior to moving to Australia Mr Jones was involved in a sales role, although he had previously worked in the production area.
4. Due to the deteriorating political and economic situation in Zimbabwe, Mr Jones and his family decided that it would be necessary for them to migrate from that country. The family began formulating plans to leave Zimbabwe in around 2000, when they could see that the situation in that country was starting to deteriorate rapidly. The family first visited Australia in December 2000 and at around that time made the decision to settle in Australia.
5. On 11 January 2002 Mr Jones was granted a temporary resident (sub-class 457) visa. However he did not enter Australia on that visa as to do so at that time would have involved him forfeiting his pension entitlements with his employer in Zimbabwe, and involved disruption to his daughter's "Cambridge A Level exam" preparation.
6. In February 2002 Mr Jones met with Allan Hodder and Nigel Saunders, then both registered migration agents in Australia, of Australian Visa and Migration Services ("AVMS"). In the same month he met with Mr Hodder and Ken Sharp and Craig Hardiman of Gilete CSI Pty Ltd (Gilete CSI) in Harare. I infer from Mr Jones' statement that this meeting occurred after he saw an advertisement in a Zimbabwe newspaper by Gilete CSI soliciting their ability to assist people to migrate to Australia. At this meeting it was explained to Mr Jones that AVMS and Gilete CSI worked cooperatively, with AVMS arranging for persons to migrate to Australia under an appropriate business visa and Gilete CSI assisting the person to "meet their visa obligations" by finding appropriate investment opportunities. Mr Hodder advised Mr Jones that, in Mr Hodder's opinion, Mr Jones would be eligible for a business skills (sub-class 128) visa.
7. Mr Jones decided to pursue a business visa as it would enable his family to become permanent, as opposed to temporary, residents of Australia. Mr Jones decided to engage AVMS to assist with the application because Mr Hodder appeared to him to be very professional and well researched in his business model and presentation. Mr Jones was also aware that Mr Hodder had previously held a senior position in the Respondent's Department, and thought that Mr Hodder appeared knowledgeable in the criteria required to apply for a visa and conform to visa obligations. Mr Jones indicated that he signed a letter of appointment of AVMS as his migration agent on 11 April 2002.
8. On 28 January 2003 AVMS lodged an application for a business skills migrant visa with the Respondent's Department on behalf of Mr Jones as primary applicant and his wife and children as secondary applicants. Included in the application papers was a "business proposal letter", which identified four possible kinds of investments which Mr Jones was then considering in Australia. One of the options was an oriental food business, drawing on his wife's cooking skills and his business and customer relations skills. Another was an investment through Gilete CSI, which had indicated that it could research appropriate investment opportunities.
9. In April 2003 Mr Jones accepted an early retirement package offered by his employer in Zimbabwe.
10. Mr Jones was granted a business skills (sub-class 128) visa, and his wife and children were granted secondary visas, on 5 June 2003.
11. On 17 November 2003 Mr Jones appointed AVMS to advise and guide him as to "the appropriateness of an Australian investment in terms of your visa obligations and your management involvement throughout the three-year period" in which his business activities were monitored by the Respondent's Department. For a fee of $2000 per annum, AVMS agreed to advise Mr Jones in respect of his business activities concerning the discharge of his "visa obligations" and "taking all reasonable action in the circumstances to enable you to meet your legal obligations and DIMIA policy requirements relating to your entry into business in Australia". Mr Jones entered into this arrangement because he wanted the assurance that he was meeting his visa obligations and because he expected AVMS to draw his attention to any shortcomings if he was not.
12. Mr Jones and his wife intended to purchase a small food business operation. However, they had been advised by friends already living in Australia to be cautious before investing in a business in Australia. This was because the number of business visa migrants seeking to invest in businesses was creating a "false demand" and that a number of unviable businesses were changing hands. As a result of these warnings, and because of his lack of knowledge of the business environment in Australia, Mr Jones decided to initially pursue an investment through Gilete CSI.
13. In January 2004 Mr Jones visited the Malaga premises of Insulation Systems Australia Pty Ltd ("ISA"), a manufacturer and installer of roofing insulation material chemically treated for fire and rodents. He met the managing director of ISA, Brett Heady, and was impressed with Mr Heady's presentation and the concept of the business. He decided to invest in ISA.
14. The means by which the investment was made was pursuant to the following structure established by Gilete CSI. Mr Hodder of AVMS was aware of the details of this investment structure and AVMS advised Mr Jones that the proposal would comply with his business visa requirements.
15. Mr Jones and his wife formed a family company, Aqua-Aus Pty Ltd ("Aqua-Aus"). Both were appointed directors of Aqua-Aus on 7 January 2004. The company was capitalised by two ordinary shares, one class A share and one class B share, each issued for $1. Mr Jones held one ordinary share and one class A share, and Aeran Jones held one ordinary share and one class B share.
16. On 6 January 2004 Aqua-Aus applied for 200,000 class A shares of $1 each in Gilete TSB Pty Ltd, and indicated that he had enclosed the sum or $200,000 which had been provided to Aqua-Aus by Mr Jones.
17. By letter dated 6 January 2004 Gilete TSB advised Aqua-Aus that its offer to purchase shareholding in Gilete TSB for the sum of $200,000 had been accepted, and that payment of that amount would be on 2 February 2004. The letter went on to indicate that:

"In addition to having a twenty percent shareholding in Gilete TSB you will also have a senior management role in the day to day operations of the Company".

18. On 2 February 2004 the Board of Directors of Gilete TSB resolved to issue 200,000 class A shares in the capital of that company. The Board also resolved that:

"That the "A" class shares in the capital of the Company have the same rights attached to them as ordinary shares including voting rights, with the exception that "A" class shares shall have no dividend entitlements attached to them and no pre-emption rights to other shares issued or transferred in the company in future"

19. The constitution of Gilete TSB was produced to the Tribunal, and the above resolution was made pursuant to article 4 of that constitution.
20. Following the issue of the shares to Aqua-Aus, the share capital of Gilete TSB consisted of 550,000 ordinary shares and 450,000 class A shares, a total capitalisation of 1,000,000 $1 shares.
21. By agreement dated 6 January 2004 between Gilete TSB and Gilete CSI, Gilete TSB agreed to pay a "facilitator fee" to Gilete CSI in respect of the investment of $200,000 made by Aqua-Aus. The "facilitator fee" was $28,000 per annum to be paid in monthly instalments of $2,333.33, for a period of 3 years ending on 2 February 2007. The agreement purported to provide for the shareholders of Gilete TSB to pay $200,000 to Aqua-Aus on 2 February 2007.
22. An agreement between Gilete CSI and Aqua-Aus dated 6 January 2004 provided that the "facilitator's fee" referred to above was for the benefit of Gilete CSI only, and that Gilete CSI agreed to pay Aqua-Aus a 6% return on its investment or $1,000 a month for three years. That agreement was conditional upon Aqua-Aus continuing to maintain its shareholding in Gilete TSB, and on Gilete TSB continuing to engage the consultancy services of Gilete Consulting Pty Ltd pursuant to a "mandate agreement" dated 6 January 2004. Gilete CSI also agreed, subject to certain conditions, to indemnify Aqua-Aus against any shortfall between the $200,000 invested in Gilete TSB and the amount received for shares in Gilete TSB at "the conclusion of your three year investment" or in "the event that Michael Jones dies". The agreement provided for Gilete TSB to "reinvest" money in certain circumstances.
23. The only significant asset of Gilete TSB was 667 ordinary shares which Gilete TSB held in ISA. The total capitalisation of ISA was 1334 ordinary shares and 334 class A shares.
24. The shares held by Aqua-Aus in Gilete TSB were subject to call and put option agreements as follows.
25. A Call Option Agreement dated 7 January 2004 was entered into between Aqua-Aus and Gilete Nominees Pty Ltd ("Gilete Nominees"). By that agreement Aqua-Aus gave Gilete Nominees an option to purchase the 200,000 shares in Gilete TSB for a purchase price of $200,000. Subject to the Put Option, referred to below, not having been exercised, the Call Option was exercisable by notice given between midnight on 2 February 2007 and 5pm on 9 February 2007.
26. A Put Option Agreement dated 7 January 2004 was entered into between Aqua Aus and Gilete CSI. By that agreement Gilete CSI gave Aqua-Aus an option to require Gilete CSI or its nominee to acquire the 200,000 shares in Gilete TSB for a purchase price of $200,000. In the event of Mr Jones' death, the option was exercisable at any time prior to 2 February 2007. Otherwise, the option was exercisable by notice given between midnight on 2 February 2007 and 5pm on 23 February 2007.
27. Subsequently, Gilete TSB was renamed Malaga TSB Pty Ltd, and Gilete Nominees was renamed GMC Nominee Company Pty Ltd. It is convenient to refer to those companies by their former names throughout these reasons.
28. By agreement dated 22 January 2004, Aqua-Aus agreed to provide Gilete CSI with a cash loan facility of $200,000, repayable on 1 February 2007, with monthly payments on interest at 10% per annum. The obligations of Gilete CSI were guaranteed by Gilete Consulting. It is not clear to me the role this loan agreement played in the transaction, as it otherwise appears that the $200,000 was advanced from Aqua-Aus to Gilete TSB as payment for the allotment of 200,000 class A shares. This issue was not explored by the parties, and in light of the Respondent's concessions as to the interest held by Mr Jones in Gilete TSB and ISA, I shall proceed on the basis that $200,000 was paid by Aqua-Aus to Gilete TSB as payment for the issue of 200,000 class A shares in Gilete TSB. It is then unnecessary for me to resolve the role of this loan agreement and guarantee in the transaction.
29. On 23 May 2004 Mr Jones signed a further letter of appointment of AVMS as his migration agent, in materially the same terms as that of 17 November 2003.
30. Mr Jones and his family arrived as permanent residents in Perth on 28 November 2004. They had not relocated to Perth earlier as they did not want to disrupt the school education of Bronwyn Jones, who was in her final year, or for Bryan Jones to change schools mid-year. They purchased a house in Sorrento in April 2005. Bryan Jones commenced year 10 of high school and Bronwyn Jones commenced a Bachelor of Science degree at the University of Western Australia in 2005.
31. Since February 2005 Mr Jones has been attending "management meetings" of ISA on a regular basis. The management meetings were chaired by Mr Heady, and attended by ISA's general manager, commercial sales manager, production manager, installation manager and office manager. They were generally held at 8am each Monday morning. Their purpose, as described in the statement of Mr Heady, is:

"...to allow my division managers to interact via focussing on the prior weeks performance, and what they want to achieve in the upcoming week."

32. Mr Heady's statement described the role fulfilled by Mr Jones in the following terms:

"In his capacity as [Gilete TSB's] representative at ISA, Mr Jones attends our weekly management meetings at 8am each Monday morning and contributes every week to these discussions. Mr Jones primary role is to ensure that [Gilete TSB's] investment is secure by establishing that ISA's operations are running smoothly from an operational perspective. Whilst this has been his main role, Mr Jones' thoughts and input into the business have also become highly valued and regarded over time by ISA's management team."

33. Mr Jones described his role in similar terms, indicating that:

"During my attendance at the weekly management meetings it was my role to comment and raise questions raised in response to management reports by the various divisional managers. In effect, one of my roles was to keep abreast of the day to day running of the business as a way of monitoring [Gilete] TSB's equity in the business. Given the very close ties between [Gilete] TSB and ISA it was my role to ensure that the business was operating well and that [Gilete] TSB's substantial stake in the business was secure."

34. I find that the above descriptions accurately reflect the nature of Mr Jones' activities in attending ISA's weekly management meetings.
35. In addition, Mr Jones would often have short discussions with Mr Heady immediately following the weekly management meetings. After around February 2006 when Mr Heady ceased attending the meetings, Mt Jones had these discussions with the General Manager of ISA.
36. Mr Jones also attended shareholder meetings of Gilete TSB and ISA. He familiarised himself with operations of ISA, including by attending the Bunbury factory in March and April 2005 (at which time he suggested some changes to the production process which were subsequently implemented), monitoring the Malaga factory and visited work sites where installation problems were being experienced.
37. Mr Jones' activities relating to ISA and Gilete TSB involved him working approximately 7 hours a week.
38. On 6 January 2006 AVMS submitted a 24 month survey of Mr Jones' business activities to the Respondent's Department. Prior to doing so he had attended the offices of AVMS and been advised by Ms Vidler of that company as Mr Hodder was away. Ms Vidler advised Mr Jones that he was complying with his visa obligations and that she had no concerns at all with the role he had played.
39. On 31 May 2006 administrators were appointed to Gilete CSI, which subsequently was placed into liquidation.
40. Following the submission of Mr Jones 24 month survey further correspondence was entered into between AVMS and the Department. Following that further correspondence, on 7 December 2006 an officer of the Department issued a notice of intention to cancel the visas of Mr Jones and his family. AVMS responded to that notice by letter dated 4 January 2007 and attachments.
41. On 4 April 2007 a delegate of the Minister decided to cancel Mr Jones' visa and the secondary visa of his wife and children. The members of the Jones family seek a review of that decision by this Tribunal.
42. By undated Heads of Agreement between Gilete TSB, Gilete Nominees and Aqua-Aus, it was agreed to extend the period for Gilete Nominees to exercise its Call Option to 60 days after the resolution of the migration status of Mr Jones. It was also agreed that, until that resolution, Gilete TSB would pay Aqua-Aus "the agreed return of 6% per annum, being $1000 per month".

LEGISLATIVE BACKGROUND

43. Section 134 of Migration Act 1958 (Cth) ("the Act") confers a discretionary power to cancel Mr Jones' visa. Section 134(1) of the Act 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.”

44. If the discretion to cancel the visa arises under s. 134(1) of the Act, then s. 134(2) of the Act provides that:

“(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.”

45. In determining whether a person has made a “genuine effort” within the meaning of s. 134(2) of the Act, s. 134(3) of the Act states:

“(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).”

46. Section 134(10) of the Act defines "eligible business" to mean:

"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."

47. By s. 134(10) of the Act, an “ownership interest” in relation to a business is defined to mean:

“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.”

48. Section 134(4) the Act provides that, subject to s. 134(5) and s. 135 of the Act, the Minister must cancel a business skills visa held by another person who is a member of the family unit of the holder of the cancelled business skills visa if that person would not have held the business skills visa but for that membership. Section 134(5) of the Act provides that the Minister must not cancel the other person’s business visa under s. 134(4) if the cancellation of that visa would result in extreme hardship to the person.

SUBSTANTIAL OWNERSHIP INTEREST IN AN ELIGIBLE BUSINESS

49. The first issue for me to consider is whether Mr Jones has obtained a substantial ownership interest in an eligible business in Australia.
50. The Respondent conceded that the business of ISA was an eligible business in Australia. I did not understand Mr Jones to contend that the businesses of either Aqua-Aus or Gilete TSB were eligible businesses, and there is no evidence that the investment business carried on by either company satisfies any of the criteria set out in s. 134(10) of the Act. The question for me is therefore whether Mr Jones has obtained a substantial ownership interest in the business of ISA.
51. Section 134(10) of the Act relevantly defines an "ownership interest" to include an interest as a shareholder in a company that carries on the business, including such an interest held indirectly through one or more interposed companies. In the present case Mr Jones contends that he holds an interest as a shareholder of ISA indirectly through Aqua-Aus and Gilete TSB, and that interest is substantial. Mr Jones contends that, through Aqua-Aus, he holds a 20% stake in Gilete TSB which in turns holds a 40% stake in ISA. Mr Jones therefore contends that he indirectly holds 8% of the shares of ISA, representing an investment of $200,000, which is a substantial interest.
52. The Respondent initially contended that as Mr Jones held only half of the shares in Aqua-Aus (the other half being held by his wife) his indirect interest in the shares of ISA was only 4%, representing an investment of $100,000. However, that contention was withdrawn at the hearing before me, and the Respondent conceded that Mr Jones effectively controlled the 8% shareholding in ISA.
53. The Respondent relied on two features of Mr Jones' indirect investment in ISA to contend that his interest did not amount to a substantial ownership interest. The first feature was the fact that the shares in Gilete TSB were class A shares which did not have a right to any dividend or pre-emption of future shares issued in ISA. The second feature was the Put Option and the agreement by Gilete CSI to indemnify Aqua-Aus against any shortfall between the $200,000 invested in Gilete TSB and the amount received for those shares. In my view these features, either taken individually or in combination, do not lead to the conclusion that Mr Jones did not have a substantial ownership interest in the business of ISA.
54. In my view the interest of Mr Jones in ISA through the class A shareholding of Aqua-Aus in Gilete TSB did confer the substantial incidents of ownership in ISA. The class A shares in Gilete TSB carried with them full voting rights, so that the control which Mr Jones was able to exercise over the affairs of both Gilete TSB and ISA was the same as would have been the case if Aqua-Aus held ordinary shares in Gilete TSB. That control was considerable given that Aqua-Aus controlled 20% of the shareholding, and therefore 20% of the members' votes, in Gilete TSB. The shares in Gilete TSB were transferrable, so they could be sold by Aqua-Aus to any person subject to the obligations which arose under the Call Option. The Put and Call Option provided for their transfer for a purchase price of $200,000. On a voluntary winding up of Gilete TSB Aqua-Aus would be entitled to a distribution of the assets of Gilete TSB (after satisfaction of all liabilities) according to the rights and interest of Aqua-Aus: s. 501 of the Corporations Act 2001 (Cth) and article 89 of the constitution of Gilete TSB.
55. Articles 82-88 of the constitution of Gilete TSB provide for the power of the company in general meeting to declare a dividend in an amount recommended by the directors of that company. Dividends may only be declared out of the present, past or reserved profits of Gilete TSB. While Gilete TSB held its shareholding in ISA, those profits could only consist of dividends payable to Gilete TSB by ISA. Further, article 85 of the constitution of Gilete TSB enabled the directors to declare dividends to the holders of any class of shares to the exclusion of the holders of any other class or classes of shares. Therefore, even in the absence of a resolution excluding class A shareholders, those shares would have carried no right to any dividend, or any right to be paid a dividend when a dividend was declared for ordinary shareholders.
56. It is easy to understand why no dividend was to be payable to holders of class A shares. Gilete TSB received the capital investment from Aqua-Aus in circumstances where it incurred a liability to pay a "facilitator fee" of $28,000 per annum to Gilete CSI and Gilete CSI agreed to pay Aqua-Aus a 6% return on its investment for three years. That payment from Gilete CSI, rather than payments of dividends, was the means by which Aqua-Aus achieved an income from its capital investment. That a return on investment was to be achieved by that mechanism, rather than dividends, does not in my opinion lead to the conclusion that Mr Jones' indirect ownership interest in ISA is not substantial.
57. The right of pre-emption is provided for in article 7 of the constitution of Gilete TSB. Article 7(1) provides for unissued shares in the company to be offered to members in proportion to the shares then held by them, before any shares not taken up are issued in such manner as the directors think most beneficial to the company. That obligation is subject to any direction to the contrary that may be given by the company in general meeting. Having regard to that qualification, any right of pre-emption would be subject to being defeated by a resolution in a general meeting of the company.
58. In the above circumstances, I do not regard the exclusion of a "right" to receive dividends, or to be offered unissued shares, to be of great significance, or to lead to the view that the ownership interest of Mr Jones in ISA is other than substantial. In my view, notwithstanding those features of the investment, Mr Jones indirectly held an interest in 667 ordinary shares in ISA, which was 8% of the shares in that company, at a capital value of $200,000 was substantial.
59. My view is consistent with the approach taken by the Tribunal in Re Abbu and Minister for Immigration and Multicultural Affairs [2006] AATA 898 at [32] and Re Hook and Minister for Immigration and Citizenship [2007] AATA 1798 at [30]. To the extent of any inconsistency, I would prefer the approach taken in those cases to that adopted in the decisions on which the Respondent relied, being Re Leo and Minister for Immigration and Multicultural and Indigenous Affairs [2006] AATA 308 at [58]- [59], Re Gunuwan and Minister for Immigration and Multicultural Affairs [2006] AATA 852 at [41]- [42] and Re Harsono and Minister for Immigration and Multicultural Affairs [2007] AATA 64 at [46]- [49].
60. The second matter raised by the Respondent was the Put Option and agreement by Gilete CSI to indemnify Aqua-Aus for any shortfall in its return on investment. The Respondent's contention was that the effect of those agreements was to minimise Mr Jones' "exposure to financial risk with respect to the investments".
61. In my view, the unsecured nature of the contractual promises made by Gilete CSI limited the extent to which the existence of the agreements minimised the financial risk. The Put Option and indemnity were not supported by any mortgage or other charge over any property, or by a bank guarantee. There is no evidence before me as to the state of the finances of Gilete CSI other than by May 2006 it appears to have been insolvent. As counsel for Mr Jones put it, the unsecured guarantee was only as good as the guarantor. Mr Jones' evidence was to the effect that he appreciated this and was concerned by it, but regarded the viable and profitable nature of ISA's business as overcoming that concern. I do not consider it correct to say that the agreements with Gilete CSI in fact had the effect, or were taken by Mr Jones to have the effect, of minimising the financial risk in relation to the investment.
62. Further, in my opinion, the fact that arrangements may have been in place to reduce or minimise risk is beside the point. The question is whether Mr Jones had a substantial ownership interest in the business, and answering that question is not assisted by inquiring as to the extent of risk which the investment presented. The fact of ownership of shares, and the nature of the rights conferred by those shares, is not affected by the existence of a contractual guarantee for the return of capital. I agree with the submission of counsel for Mr Jones that the ownership is not less substantial because of a contractual entitlement to be insured against capital loss.
63. For the above reasons, I am of the view that Mr Jones Mr Jones has obtained a substantial ownership interest in the business of ISA, which is an eligible business in Australia.

PARTICIPATING IN MANAGEMENT AT A SENIOR LEVEL

64. The next issue which it is necessary to consider is whether Mr Jones is using his skills in actively participating at a senior level in the day-to-day management of ISA's business. As neither Aqua-Aus nor Gilete TSB conduct eligible businesses, the question is not whether he so participated in the management of a business carried on by those companies.
65. I have set out above my findings of primary fact as to the activities engaged in by Mr Jones in relation to the business of ISA. In my view, it cannot be said in light of those facts that Mr Jones actively participated at a senior level in the day-to-day management of ISA's business. I agree with the Respondent's characterisation of Mr Jones participation in the affairs of ISA as that of an investor interested to protect his investment. While there may have been some activities of a managerial nature involved, it cannot in my view be said that Mr Jones was participating at a senior level in the day to day management of the company. He held no position with the company, and was involved in attending meetings only one day a week. While Mr Jones' input came to be appreciated, the senior management of ISA's business rested with the Managing Director, the General Manager and the various divisional managers and not Mr Jones.
66. I therefore conclude that Mr Jones has not at any time since the grant of his visa been using his skills in actively participating at a senior level in the day-to-day management of ISA's business. Subject to the operation of s. 134(2) of the Act, my discretion to cancel Mr Jones' visa is therefore enlivened.

GENUINE EFFORTS

67. Section 134(2) of the Act prohibits me from cancelling Mr Jones' visa if I am satisfied that he has made a "genuine effort" to do the prescribed things and intends to continue to make such genuine efforts. Given that I have found that Mr Jones did obtain a substantial ownership interest in an eligible business in Australia, s. 134(2)(a) of the Act is not relevant. The question is therefore whether Mr Jones:

"has made a genuine effort to utilise his ... skills in actively participating at a senior level in the day-to-day management of that business"

and intends to continue to do so.

68. In Hook at [39] the Tribunal expressed the view that the phrase “genuine effort”, in s 134(2) of the Act, is an ordinary English phrase and should be given its ordinary meaning. In that case the Tribunal expressed its view that the appropriate meaning of that phrase for present purposes, having regard to dictionary definitions, is "endeavour or exertion which is sincere and real". I agree with that observation.
69. As the Tribunal in Hook also noted, at [38], the matters listed in s. 134(3), and the policy guidelines in relation thereto, are, for the most part, of greater relevance to the issue of genuine effort to obtain a substantial ownership interest in an eligible business (para (a)) than to the issue of genuine effort to utilise skills in actively participating at a senior level in the day-to-day management of that business (para (b)).
70. The Tribunal in Hook went on to consider a submission by the Respondent that efforts which "cannot realistically satisfy " the matters referred to in s. 134(2) of the Act cannot be said to be genuine efforts. The Tribunal said at [41]-[43]:

"The question whether, for the purposes of s 134(2) of the Act, a person has made a 'genuine effort' in relation to the matters referred to in that subsection raises, in the Tribunal’s opinion, both subjective and objective considerations. The essential issue is whether the person has made a relevant effort which is genuine – that is, an effort which has been made sincerely and which is real and not in the nature of a pretence or a sham.

The Tribunal accepts the proposition that relevant activities undertaken by a person, which could not satisfy the matters referred to in paras (a) and (b) of s 134(2) of the Act, and which the person knew, or had good reason to know, could not satisfy those matters, will not constitute a “genuine effort”, for the purposes of s 134(2).

The Tribunal, however, does not accept the proposition that relevant activities undertaken by a person, which could not satisfy the matters referred to in paras (a) and (b) of s 134(2) of the Act, but which the person did not know, or have good reason to know, could not satisfy those matters, will necessarily not constitute a 'genuine effort', for the purposes of s 134(2). In the Tribunal’s opinion, where a person has undertaken substantial activities in a sincere endeavour to satisfy the matters referred to in paras (a) and (b) of s 134(2), in the honest and reasonable belief that the activities undertaken have satisfied those matters, that person has made a “genuine effort”, within the meaning of s 134(2), to satisfy those matters, notwithstanding that the activities undertaken could not have satisfied those matters."

71. That approach in Hook was endorsed by the Tribunal in Re McAlpin and Minister for Immigration and Citizenship [2008] AATA 109 at [58].
72. If I were to adopt the same approach I would conclude that Mr Jones did relevantly make a genuine effort. I have no difficulty in concluding that Mr Jones did make a sincere effort to satisfy what he referred to as his "visa obligations", and honestly believed he was doing so by participating in the affairs of Gilete TSB and ISA. That belief was reasonable given the advice which he had received from the registered migration agents he had engaged to advise him and monitor his efforts. His efforts, while not constituting participation at a senior level in the day to day management of ISA, were clearly substantial. This was not a pretence or sham. Mr Jones intended to invest in a business in Australia and to comply with his visa obligations. He invested in ISA because he believed, on advice from a registered migration agent, that this would enable him to meet his visa obligations while he gained a better appreciation of the local business climate so as to be able to invest in a food service business at a later time. Had he appreciated that it did not, he would have either invested in another business or sought to involve himself in an appropriate level of management of the business of ISA.
73. However, notwithstanding the approach taken in Hook and McAlpin, in my view the question is not whether a visa holder has made a genuine attempt to satisfy his visa obligations, as Mr Jones put it, or perhaps more accurately, to avoid his visa being liable to cancellation. That is, the question is not whether Mr Jones has made a genuine effort to satisfy the matters referred to in paras (a) and (b) of s. 134(2) the Act. Rather it is whether he has made a genuine effort to utilise his skills in actively participating at a senior level in the day-to-day management of ISA's business.
74. The difficulty which I have in this case is that Mr Jones has made no attempt to participate in the management of ISA to any greater extent than he in fact achieved. He did not, for example, seek to be appointed as a managing director of the company, or employed as a divisional manager, and fail in that attempt. He did not make such an attempt because he understood that what he was doing would satisfy his visa obligations. If the terms of the provision had been put to him, he may have thought that he was actively participating at a senior level in the day-to-day management of ISA's business for the purposes of s. 134(2)(b) of the Act. That view would have been mistaken even though, given the advice which Mr Jones had received from his registered migration agents, it was a perfectly reasonable mistake. However, a mistake as to what s. 134(2)(a) of the Act requires, combined with steps taken to comply with the misapprehended requirement, does not in my view constitute a genuine effort to actively participate at a senior level in the day-to-day management of the business.
75. In my view, s. 134(2)(b) of the Act is directed to a circumstance where a visa holder has sought, but failed, to do something. If s. 134(2)(b) is to be applicable, the efforts which have been employed in that aim will necessarily have been ineffective. So long as the efforts to do the thing are sincere and real then there will have been a genuine effort even if the steps could never have achieved the aim. For example, a person who has done all within their power to achieve a result may have made a genuine effort even though it was not in their power to do so. However, it is a question of law as to whether the "thing" which the person has attempted, but failed, to achieve is that to which the statute refers.
76. In this case Mr Jones did not seek but fail to do anything which would involve actively participating at a senior level in the day-to-day management of ISA's business. He cannot be said to have made any genuine effort to do so. The fact that he may have mistakenly thought that he was meeting the statutory requirements does not, in my view, alter that conclusion. It follows that, in my view, s. 134(2) of the Act does not prohibit me from cancelling Mr Jones' visa in the circumstances of this case.

EXERCISE OF DISCRETION

77. It is clear that there remains what is sometimes referred to as a "residual discretion" not to cancel a visa if the circumstances warrant such exercise: see Kim v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 31; (2004) 38 AAR 304 and Kok and Minister for Immigration and Multicultural and Indigenous Affairs [2005] AATA 579 at [53]. Perhaps a better way of expressing the requirement is that, the discretion having been enlivened, I must consider how the discretion should be exercised.
78. In my opinion, there are a number of factors which count in favour of exercising my discretion not to cancel Mr Jones' visa.
79. Firstly, Mr Jones has acted on the advice of a registered migration agent and reasonably but mistakenly understood that what he was doing complied with his visa obligations. He engaged the agent on a continuing basis to monitor that what he was doing did comply with the requirements of his visa. The fact that the advice turned out to be incorrect should not be held against Mr Jones. He has, as I have found above, made a genuine effort to comply with the requirements of s. 134(1) of the Act and, in light of the professional advice he had received, reasonably believed he had done so.
80. Secondly, Mr Jones came to Australia with a genuine intention of purchasing and managing an eligible business. He maintains that intention, and will be in a position to do so once he is able to sell his shares in Gilete TSB. The terms of the Heads of Agreement with Gilete Nominees, and the nature of ISA's business, suggest that this is a real prospect once the question of the cancellation of Mr Jones' visa is resolved.
81. Thirdly, Mr Jones has in fact obtained a substantial ownership interest in an eligible business and maintains that ownership interest. He has actively participated in the affairs of the business. Although I have found that the activity did not involve participating at a senior level in the day-to-day management of ISA's business, his efforts and input in relation to the business were more than token.
82. Fourthly, Mr Jones and his family have in fact moved to Australia on a permanent basis. This is not a case of an "absentee businessman" who seeks a visa for some non-business purpose. Mr Jones and his family have made a commitment to Australia by purchasing property and participating in the community.
83. Having regard to all of the above circumstances, I consider it appropriate to exercise my discretion not to cancel Mr Jones' visa.

SECONDARY VISA HOLDERS

84. Given my view as to Mr Jones' visa, the question of cancellation of the secondary visas of his wife and children does not arise.

DECISION

85. For the above reasons I would set aside the decisions under review and substitute decisions that the Applicants' visas not be cancelled.

I certify that the 85 preceding paragraphs are a true copy of the reasons for the decision herein of Ms LR Tovey, Member

Signed:...(sgd) T Freeman................

Associate

Dates of Hearing: 25 and 26 February 2008

Date of Decision 8 January 2009

Representative for the Applicants Mr M Solomon and D Barich

Representative for the Respondent Mr S Thackrah

Solicitors for the Applicants Fiocco's Lawyers

Solicitors for the Respondent Australian Government Solicitor