Suwito and Minister for Immigration and Citizenship [2009] AATA 34 (19 January 2009)

Last Updated: 21 January 2009

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 34

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2007/4485

GENERAL ADMINISTRATIVE DIVISION		)
	Re		STEFANUS SUWITO

Applicant

And

MINISTER FOR IMMIGRATION AND CITIZENSHIP

Respondent

DECISION

Tribunal

Mrs Josephine Kelly, Senior Member

Date 19 January 2008

Place Sydney

Decision

The reviewable decision is affirmed.

.....................[sgd]........................
Mrs Josephine Kelly
Senior Member

CATCHWORDS

IMMIGRATION AND CITIZENSHIP – Business Skills Visa – Cancellation – Applicant set up company to export wheat to Indonesia – Sole buyer applicant’s Indonesian company - Whether business – Whether eligible business - Whether an eligible business in Australia – Whether genuine efforts – Activities not for profit but to achieve migration outcome – Held not an eligible business in Australia – No genuine effort – Discretion not exercised – Decision affirmed

Migration Act 1958, s 134

Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1

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

Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634

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

Skoljarev v Australian Fisheries Management Authority (1995) 133 ALR 690

Procedures and Advice Manual 3, Act – Visa Cancellation – Business visas cancellation

REASONS FOR DECISION

19 January 2008

Mrs Josephine Kelly, Senior Member

1. On 23 August 2007 a delegate of the Minister for Immigration and Citizenship cancelled Mr Stefanus Joko Mogoginta Suwito’s Business Skills (Migrant) Sub-Class 127 – business Owner Visa (business visa) under s 134 of the Migration Act 1958 (the Act). The visas of Mr Suwito’s wife and two dependants, who held family member visas, were also cancelled, however there are no proceedings before me in respect of those matters. Mr Suwito seeks review of the decision to cancel his business visa.

THE ISSUES

2. Mr Zipser, counsel appearing for Mr Suwito, conceded that if Mr Suwito's activities relating to Great Egret Pty Limited were not successful, he could not satisfy the criteria in s 134(1) and (2) of the Act in respect of his activities relating to Westside Developments WA Pty Limited (Westside) However, he submitted that those latter activities may be relevant to the exercise of the residual discretion
3. The issues were therefore as follows.
4. First, am I satisfied that the evidence establishes one or more of the three criteria for cancelling Mr Suwito's visa pursuant to s 134(1) of the Act? The questions for consideration are:

(a) Has Mr Suwito obtained ‘a substantial ownership interest in an eligible business in Australia’. The sub-issues are:

(i) Is Great Egret a business?

(ii) If so, is Great Egret an eligible business? That is, do I believe on reasonable grounds that it is resulting in or will result in one or more of the outcomes set out in s 134(10), (a) to (f)?

(iii) If so, is Great Egret an eligible business in Australia?

(iv) If so, has Mr Suwito obtained a substantial ownership interest in Great Egret?

(b) Is Mr Suwito utilising his skills in actively participating at a senior level in the day-to-day management of that business?

(c) Does Mr Suwito 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 Great Egret?

5. Secondly, if one or more of the criteria for cancellation exists, am I satisfied that Mr Suwito:

(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.

If I am so satisfied, I must not cancel Mr Suwito's visa.

6. Third, if Mr Suwito has been unsuccessful to this point, should I exercise the residual discretion in s 134 of the Act not to cancel Mr Suwito’s business visa.

CONSIDERATION

Is Great Egret a "business"?

7. Mr Zipser submitted that Great Egret was a business because it carries on trading activities, that is, the export of wheat flour to Indonesia, on a continuing basis, and makes a profit, which he acknowledged to be "modest".
8. This submission implicitly accepts the notion of "business" discussed by Mason J in Hope v Bathurst City Council in the context of the statutory phrase "carrying on a business". His Honour said that a business may be regarded as being 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". The term "business" is not defined in the Act. It arises in the definition of "eligible business" in s 134(10) of the Act:

eligible business means a business that the Minister reasonably believes is resulting or will result in one or more of the following:

(a) the development of business links with the international market;

(b) the creation or maintenance of employment in Australia;

(c) the export of Australian goods or services;

(d) the production of goods or the provision of services that would otherwise be imported into Australia;

(e) the introduction of new or improved technology to Australia;

(f) an increase in commercial activity and competitiveness within sectors of the Australian economy.

9. Paragraph 7.3 of the Procedures and Advice Manual 3 (PAM 3) expressly endorses the approach of Mason J in Hope.
10. Paragraph 7.3 of the PAM 3 sets out relevant policy considerations:

In ascertaining whether activities constitute the carrying on of a business, officers may, under policy, consider factors such as whether:

● transactions are entered into on a continuous and repetitive basis for the purpose of making a profit

● the activity has a permanent character, and how long it has been established;

● customers are sought and financial records are kept; and

● the activities are genuine and real.

11. The Tribunal will ordinarily apply lawful ministerial policy or departmental guidelines unless there are cogent reasons not to: Re Drake and Minister for Immigration and Ethnic Affairs. To do so promotes consistency in decision-making: Skoljarev v Australian Fisheries Management Authority at 695. I take the policy into account, however it is necessary to consider the particular statutory provision.
12. As stated above, the statutory phrase considered in Hope was "carrying on a business", and Mason J emphasised the need (at page 10):

to engage in a process of construction in order to arrive at the meaning of the word [business] in s 118 (1) [of the relevant Act].

13. Section 134(10) of the Act does not include the phrase "carrying on".
14. The Macquarie Dictionary (Revised Third Edition) defines “business” as:

Noun 1. one’s occupation, profession, or trade. 2. Economics. the purchase and sale of goods in an attempt to make a profit. 3. Commerce. a person, partnership or corporation engaged in this; an established or going enterprise or concern: a clothing business. 4. volume of trade or patronage.

15. The ordinary meaning of "business," in the second and third dictionary definitions quoted above, are relevant in my opinion. I would respectfully agree with the conclusion of Deputy President McMahon in Re Tang and Minister for Immigration and Multicultural Affairs at [20] that the language in s 134 indicates that the eligible business must have some element of continuity and repetition. More importantly for the purposes of these proceedings, the activities must be undertaken for the purpose of making a profit.
16. On the evidence I find that the activities undertaken by Great Egret do not constitute a business as that term is used in s 134(10) of the Act. The activities are not for the purpose of making a profit but for the purpose of a migration outcome, that is, to avoid having the business visa cancelled. I have come to that conclusion for the following reasons.
17. Mr Suwito applied for the business visa on 13 December 2002. It was granted on 9 January 2004 and he first entered Australia on 27 June 2004. On 27 July 2006 a 24 month survey form was sent to Mr Suwito, to which he responded on 25 September 2006.
18. Great Egret was incorporated on 11 September 2006, after the 24 month survey was sent. Mr and Mrs Suwito are the only directors, and they hold 50 per cent of shares in the company, respectively. A business plan supplied to the Department of Immigration and Citizenship in October 2006 described how Great Egret was to export and market Australian wheat to Indonesia, set out the company’s marketing strategy, and stated that the business “has good profit potential”. It was expected that $300,000 worth of wheat flour would be exported in 2006. Financial records before me showed that Great Egret recorded a Profit from Ordinary Activities before income tax pf $2,863.73 for the financial year ending 30 June 2007. There were no financial statements for the 2007/08 financial years before me.
19. The first contract entered into between Great Egret and Manildra Flour Mills Pty Limited (Manildra) was dated 23 November 2006, with delivery between March and April 2007. I find on the evidence that wheat flour worth more than $A4 million has been imported into Indonesia from Manildra since that date and the recipient is always PT Tiga Pilar Sejahtera (TPS), an Indonesian company with which Mr Suwito is closely involved. The nominal buyer from Manildra is Great Egret.
20. I accept Mr Suwito's evidence concerning the operation of, and the extent of his involvement with TPS. He said that companies within Indonesia require a licence to import certain goods, including wheat flour, that such licences are difficult to get, and that TPS obtained a licence to import food inputs including what flour, rice, sugar and corn, in about 2005. He said that he was aware that TPS could import wheat flour from Australia and then sell the wheat flour to local companies. He described how he met and negotiated with the representatives of Manildra, mostly in Indonesia. TPS assisted Manildra to obtain a licence stating that it manufactures flour according to the national Indonesian standard. Mr Suwito explained that TPS increased its consumption of the Australian wheat flour in the year ending 30 June 2008, compared to the previous year, and also sold a greater amount of the Australian flour to other companies in Indonesia.
21. Mr Suwito is the third generation of the family which founded TPS. Since 1995 he has been the President Director of TPS, there being two other directors. There is also a President Commissioner and four other Commissioners. TPS comprises three companies – TPS Food, TPS Agriculture and TPS Energy. Each company has a chief executive officer who manages the company. He currently owns 14% of the shares in each of the three TPS companies.
22. TPS food is listed on the stock exchange and since 2003 it has purchased a number of other businesses. It has a market capitalisation of about $A20 million. In 2005, the aim of TPS was to be one of the top five food and beverage manufacturers in South-East Asia by 2022. Mr Suwito said that TPS invested $US10 million in palm plantations in 2004 and made a further investment in 2006. TPS has 12,000 hectares of palm plantations in Kalimantan, of which 5,500 is planted. It takes five years before the fruit can be processed. A processing plant is planned for 2009. He said that the TPS web site shows sales of $A40 million for 2006 (I was not sure whether this was for all three companies or only for the food division).
23. Mr Suwito emphasised that he is not involved in the day to day running of the TPS. Part of his job is to make strategic decisions, his particular strength, and to network and create new opportunities for TPS. He meets with the other directors at least once a week on a Monday to discuss matters concerning the companies they run. On Tuesday and Wednesdays he goes to sites including a manufacturing plant in Surakarta, oil plantations in Kalimantan and a power plant near Surabaya which uses coal from Kalimantan.
24. In 2003, Mr Suwito moved from Surakarta in central Java, to Jakarta because TPS was growing bigger and bigger.
25. In my view it is clear that Mr Suwito is pivotal to the operations of TPS, which is clearly a very successful and rapidly expanding business. There is no commercial reason for the existence of Great Egret. It sells the wheat flour to TPS "at a slightly higher price than Great Egret" purchases it from Manildra, as Mr Suwito expressed it in his written statement. During cross-examination he said that the difference was $5 per tonne. Mr Suwito acknowledged that there was no reason that TPS could not deal directly with Manildra. Clearly, it would be cheaper for TPS to do so. I find that Great Egret has been created as an Australian entity to carry out activities that TPS could carry out itself, not for the purpose of making a profit but as a device to give the appearance of his satisfying the criteria set out in s 134 of the Act.

Is Great Egret an eligible business in Australia?

26. If my finding that Great Egret is not relevantly a business is wrong, the next question is whether it is an eligible business in Australia. There are two parts to that question. The first question is, is Great Egret an eligible business as defined in s 134(10)? Given its activities, I would find that it satisfies s 134(10)(c) of the Act because it has resulted in the export of Australian goods or services. However, the qualifying words "in Australia" need to be considered.
27. Mr Zipser argued that the business was carried on in Australia because it involved the export of goods by a company based in Australia. He conceded that decisions are made in Indonesia and much of the paperwork is prepared in Indonesia. He acknowledged that the business has no office in Australia, much of the paper work is prepared in Indonesia, and that Mr Suwito owns no place of accommodation in Australia. He pointed to a bank document that had been prepared in Australia and sent to Indonesia for signature and to documents related to shipments that were prepared in Australia. I understood Mr Zipser to argue that although Mr Suwito was based in Indonesia for the most part, the directing mind and will of Great Egret was based in Australia.
28. I find that Great Egret is not an eligible business in Australia. The connections with Australia are insufficient to satisfy the statutory criterion in s 134 of the Act. Those connections are that it is a company registered in Australia, it lodges tax returns in Australia, and an Australian based firm of accountants is retained and paid. Mr Suwito agreed that banking for Greater Egret is done in Indonesia and that it has no business premises in Australia. The registered office and principal place of business listed on the ASIC extract for Great Egret is the address of a firm of immigration and business consultants which acted for Mr Suwito.
29. He said that he uses TPS as his vehicle because it has an import licence and he agreed that TPS is Great Egret's only customer to date. He has spent little time in Australia and makes decisions and conducts the activities of Great Egret from Indonesia. I infer that he uses the facilities of TPS in Indonesia to conduct those activities. The tax returns for Great Egret show no payment for wages.
30. As already stated, I find that Great Egret is simply a device, an Australian registered entity, which is undertaking an activity which could be done at less cost by TPS directly.
31. It follows, that I am not satisfied that Mr Suwito has obtained a substantial ownership interest in an eligible business in Australia.
32. I would add that Mr Suwito's ownership of 50 $1 shares in Great Egret would not satisfy me that he has a "substantial ownership interest" in Great Egret. For the year ending 30 June 2007 the financial records assert a profit before tax of $2,863.73. Although large purchases were made from Manildra during 2008, I infer from the evidence, including various letters of credit issued by PT ANZ Panin Bank, Jakarta, that the funds for the purchases from the beginning of the activity have come from TPS.

Am I satisfied that Mr Suwito's visa should not be cancelled?

33. As I am satisfied that a reason exists for cancelling Mr Suwito's visa, the next question is am I satisfied that Mr Suwito:

(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.

34. Although I did not understand Mr Zipser to rely on Mr Suwito's involvement in Westside in relation to this question, I think it is appropriate to consider that also. Westside is a company carrying out a property development in Perth of seven townhouses. The documents in evidence showed that Mr Suwito began correspondence with Westside on 20 March 2007 and was appointed International Development Manager in July 2007. He purchased 150,000 $1 shares. Although an Australian company, the minutes of meetings for July, August and two in September 2007 showed that they were held in Jakarta. I am not persuaded that Mr Suwito is involved in the activities of this entity to any significant extent. His role has been limited to attending an exhibition in Jakarta where Westside was marketing its Perth development and attending meetings. It is carrying out one small development. I find that Mr Suwito's involvement in this company was another attempt to appear to satisfy the criteria in s 134, rather than a genuine effort do so.
35. Taking into account all of the evidence in relation to Mr Suwito’s activities in connexion with Great Egret and Westside, I am not satisfied that Mr Suwito has made or intends to continue to make the genuine efforts specified in s 134(2) of the Act.

Discretion

36. The final issue is whether I should I exercise the residual discretion in s 134(1) not to cancel Mr Suwito’s business visa. As Kiefel J said in Kim v Minister for Immigration and Multicultural and Indigenous Affairs at 310:

The Minister might be satisfied of the matters referred to in subs (1) and not be satisfied as to the efforts made as referred to in subs (2) but nevertheless consider in a particular case that further time should be given to the visa holder to undertake what was required of them. An explanation satisfactory to the Minister, of inaction up to the point of assessment, might be given.

37. Mr Zipser argued that I should take into account Mr Suwito's involvement with Westside as well as Great Egret. I have taken these activities into account.
38. Mr Suwito gave as reasons for wanting to come to Australia, first that he was thinking of his children's education, and secondly, that he wanted a better environment for his family. He said that although he has not moved here, "he is willing to", and that is why he appealed the cancellation decision. He has not decided whether to send his son to school in Australia. He will see. He has looked at boys' schools in Perth and Sydney. He also said something about his wife coming to Australia also, but I was unclear what he meant. Mr Suwito also expressed somewhat vague plans to import to Indonesia other goods from Australia, including skim milk, frozen meat and young cattle but he would not sell them to TPS.
39. I find that Mr Suwito wants to keep his options open, and that is what these proceedings have been about. I am not persuaded that if further time were given to Mr Suwito that he would undertake what was required of him, as Kiefel J said.
40. I am not persuaded that this is an appropriate case in which to exercise the discretion not to cancel Mr Suwito's visa.

DECISION

41. For the above reasons, the reviewable decision to cancel Mr Suwito's business visa is affirmed.

I certify that the 41 preceding paragraphs are a true copy of the reasons for the decision herein of Mrs Josephine Kelly, Senior Member.

Signed: .........[sgd].........

Steven Mulipola, Associate

Date of hearing: 5 September 2008

Date of decision: 19 January 2009

Counsel for the Applicant: Mr B Zipser

Representative for the Applicant: Accentro Legal

Solicitors for the Respondent: DLA Phillips Fox