Weng and Minister for Immigration and Citizenship [2010] AATA 60 (29 January 2010)

Last Updated: 29 January 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 60

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2009/2942

GENERAL ADMINISTRATIVE DIVISION		)
	Re		Wuyue Weng

Applicant

And

Minister for Immigration and Citizenship

Respondent

DECISION

Tribunal

Senior Member Jill Toohey

Date 29 January 2010

Place Sydney

Decision

The decision under review is affirmed.

................................................
Senior Member

CATCHWORDS

IMMIGRATION – business skills visa – property development – substantial ownership interest in an eligible business – genuine efforts – residual discretion – decision under review affirmed.

Administrative Appeals Tribunal Act 1975

Migration Act 1958

Basuki and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 630

Hope v Bathurst City Council (1980)144 CLR 1

Koosasi v Minister for Immigration and Citizenship [2007] AATA 1311

Li and Minister for Immigration [2009] AATA 501

Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40

Oetama Oh and Minister for Immigration and Citizenship [2009] AATA 552

Pan and Minister for Immigration and Citizenship [2007] AATA 1724

Puzey v Commissioner of Taxation [2003] FCAFC 197; (2003) 131 FCR 244

Rasyid and Minister for Immigration and Citizenship [2009] AATA 341

Re Kuchner and Minister for Immigration [2008] AATA 1170

Re Liu and Minister for Immigration (2009) 106 ALD 691

Russo and Minister for Immigration [2007] AATA 2054

Shi v Migration Agents Registration Board [2008] HCA 31

Tan and Anor and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 808

Yam v Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283

REASONS FOR DECISION

29 January 2010	Senior Member Jill Toohey
BACKGROUND

1. Mr Wuyue Weng is a Chinese citizen. He was granted a business skills visa on 18 October 2005. On 4 June 2009 the Minister for Immigration and Citizenship cancelled his visa. Mr Weng seeks review of that decision.
2. Mr Weng is a director of Southeast International Investment Pty Ltd (SII), a company registered in January 2007 for the purpose of property development in Canberra. He holds a 40% share in the company and his wife and son hold a 30% share each.
3. By s 134 (1) of the Migration Act 1958 (the Act), the Minister may cancel a business skills visa if satisfied that the 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 hold substantial ownership in and utilise his or her skills in actively participating at a senior level in the day-to-day management of, an eligible business in Australia.
     
4. The Minister must not cancel a business visa if satisfied that the holder has made a genuine effort to obtain the required business interest 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: s 134(2).
5. The Minister contends that Mr Weng has not obtained a substantial ownership in an eligible business, has not made a genuine effort to obtain such interest, and has not made a genuine effort to actively participate as required in the management of such business.

THE ISSUES

6. There is no real dispute about the facts. I have to decide:

(i) whether any of the grounds in s 134(1) of the Act for cancellation of Mr Weng’s business skills visa is made out;

(ii) if so, whether Mr Weng has made genuine efforts to satisfy the necessary criteria;

(iii) if Mr Weng has not made genuine efforts to satisfy the necessary criteria, whether the Tribunal should nevertheless exercise its residual discretion in his favour.

7. For the following reasons, I am satisfied that the decision to cancel Mr Weng’s business skills visa should be affirmed.

PRELIMINARY ISSUE

8. A preliminary issue arises as to the evidence the Tribunal can take into account in reaching its decision.
9. The Minister submits that the Tribunal is confined to evidence as at the conclusion of the three-year period provided for by ss 134(9) and 135(4) of the Act. In Mr Weng’s case, that period expired three years after 11 March 2006 when he first arrived in Australia. The Minister relies on what he says is Parliament’s clear intention in the legislation, the effect of s 43(1) of the Administrative Appeals Tribunal Act 1975, and the decision of the High Court in Shi v Migration Agents Registration Board [2008] HCA 31.
10. Mr Weng submits that the Tribunal is not so confined and that evidence of events after the expiry of the delegate’s power can be taken into account. At the very least, he says, evidence of facts and circumstance after that time may be taken into account in determining whether he satisfies the genuine efforts test. The Minister does not take issue with this last point.
11. Shi (above) concerned the cancellation of a migration agent’s registration. The High Court decided the Tribunal could take into account facts and circumstances after the cancellation decision when determining whether Mr Shi was a fit and proper person to be a migration agent. The decision does not finally determine the question in relation to cancellation of a business skills visa but the principles enunciated by the Court are directly relevant.
12. The starting point in each case is the enabling legislation and the “precise nature and incidents of the decision that is the subject of the review”. It “may be inherent in the nature of a particular decision that review is confined to past events”: Kirby J [at 25, 44].
13. Otherwise, unless the enabling legislation provides a statutory basis for confining the Tribunal to past events, unless there is a “critical statutory question as to a particular time”, the Tribunal may take into account information about matters occurring after the decision under review: Hayne and Heydon JJ [at 99]. “Where the decision to be made contains no temporal element, evidence of matters occurring after the original decision may be taken into account”: Kiefel J [at 142]
14. The Minister contends that the three year period provided by ss 134(9) and 135(4) of the Act is just such a temporal limit. In relation to business skills visas, the Tribunal has rejected that view in a number or cases (see, for example, Re Liu and Minister for Immigration (2009) 106 ALD 691; Re Kushner and Minister for Immigration [2008] AATA 1170); Rasyid and Minister for Immigration and Citizenship [2009] AATA 341. In other cases the Tribunal has decided differently: Li and Minister for Immigration [2009] AATA 501.
15. I do not agree that the Tribunal is constrained in the way contended for by the Minister, although the argument that s 43(1) has that effect has considerable force. I am not persuaded that the three-year period is critical in the sense contemplated by Shi. Its purpose is to give some certainty to the business community, rather than being a critical matter going to the scope and purpose of the business visa legislation itself.

HAS MR WENG OBTAINED A SUBSTANTIAL OWNERSHIP INTEREST IN AN ELIGIBLE BUSINESS

16. I accept Mr Weng’s evidence that, by September 2009, his total investments in Australia amounted to more than $2.1 million, comprising some $1.3 million capital investment in SII, $978,500 paid to Classic Constructions to build homes on land purchased by SII, and various expenses.

Substantial ownership interest

17. There is no dispute that Mr Weng holds an ownership interest in SII. The issue is whether his interest is substantial.
18. “Substantial” is not a precise term. I agree with the Tribunal’s 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 of the Act, it indicates “a degree of ownership of a company or a business in the sense of ability to control or manage the business, and 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”.
19. The Minister contends that, because the 2009 Financial Statements for SII show Mr Weng’s contributions as loans rather than invested capital, and because there are no business plans indicating further expansion or alternative use of that capital, his interest is temporary only and not substantial.
20. While there is some force to this argument, I do not agree that it follows from the loans that Mr Weng’s interest in SII is not substantial. I am satisfied that his 40% share in SII, which now owns properties worth approximately $1.5 million, is a substantial interest in the company and any business it might conduct.

Is SII engaged in business

21. The term “business” is not defined in the Act but it 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”: Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1 per Mason J at [14].
22. In Puzey v Commissioner of Taxation [2003] FCAFC 197; (2003) 131 FCR 244, the Federal Court (Hill and Carr JJ, French J agreeing) said that whether a person is carrying on a business will depend on the facts and circumstances. Size is not determinative and nor is whether a person is also engaged in other activity such as full-time employment; a person may appoint another to perform the activity of the business. However:

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 ibid 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).

23. In his visa application, Mr Weng expressed his interest in an electrical retail store in Canberra, although at that time his investigations were in the early stages and he was looking at other possibilities. He has considered a number of business possibilities since being granted his visa. One option he investigated was real estate. He also investigated the tourism and health markets; exporting Australian sheep skin, wool products, leather wear and under garments to China; a restaurant or coffee shop, a souvenir business; gifts and Manchester; and, recently, a retail household and kitchen items business.
24. By September 2006, Mr Weng’s investigations led him to conclude that an electrical retail business was not commercially feasible. However, he continued to investigate the other possibilities, in particular real estate.
25. In March 2007, SII purchased a residential property in Dickson in Canberra and, in December 2007, three vacant blocks in Bonython in Canberra. In November 2008,SII engaged Classic Constructions to build three houses on the Bonython blocks. Construction is now complete and two of the houses are for sale. Mr Weng’s son lived in the Dickson property until it was sold in November 2009 and now lives in the third Bonython house.
26. SII has one employee, the wife of an associate of Mr Weng, who lives in Sydney. She does not work fixed hours and her sole task seems to be to translate documents. Mr Weng claims that his wife and son are engaged in the business but his evidence about their roles was vague. His wife does things “like market research”. His son helps look for premises and products and helped design and register a trademark for the kitchen appliance business but has no fixed hours and is not paid and, until recently, was a student. Mr Weng says his son has “tasks and targets” but his tasks are ill-defined and there is no evidence of “targets”.
27. Mr Weng claims that his relative, Mr Lin Shu, who lives in Sydney and has connections in property development, helped in the business by researching “every day” and identifying the Bonython properties. Mr Lin is a teacher at Sydney University. A former class mate, Mr Qua, who lives in Canberra and is “in construction”, also helped. Mr Weng claims that both are to receive 10% commission on the sale of the Bonython properties.
28. Until recently, SII had its office at the Dickson property where Mr Weng’s son lived. However, no one, other than his son, ever went there to do business. Mr Weng relies on telephone records showing numerous calls to and from his son as evidence of their business activity but it does not necessarily follow that they were engaged in business. His son drives a car bought in his own name but registered to SII.
29. Mr Weng says he is looking to purchase other land for development, including sites with existing properties, once the Bonython properties are sold. He has nominated several properties in Canberra as possibilities. He describes the purchase of these as “still under negotiation”.
30. I accept that Mr Weng may be considering investing in further property and may need to wait until the sale of the Bonython properties before proceeding but mere repetition does not itself make an investment activity a business.
31. I accept Mr Weng’s contention that, by its nature, property development is slower to realise than some other types of business and may take longer to acquire the characteristic of repetition. I accept that profit is a motive in the purchase, development and sale of the Bonython properties. (I accept that actual profit is not necessary in order to find SII to be a business). However, profit alone is not sufficient to make SII’s activity a business; any private investment aims to make profit.
32. In my view, SII’s activities lack sufficient of the “badges of trade” that the courts have referred to as indicia of business activity. I am not satisfied that Mr Weng’s son and associates have done more than help out with general research into investment possibilities, even if they spent considerable time doing so.
33. Mr Weng acknowledges that he is a very successful businessman in China. By contrast, his investments in Australia lack a sense of forward planning and activity consistent with business activity rather than private investment. He continues to cast about for investment opportunities. In all the circumstances, I find that Mr Weng is a private person looking for investment opportunities through SII. I am not satisfied that SII is engaged in a business.

Eligible business

34. Even if SII is engaged in business, it must still be an “eligible business” as defined in s 134(1) 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.

35. Mr Weng contends that the business activities of a property development company, in identifying viable land and employing the various skilled tradespeople necessary to make it attractive to a particular market, as well as the range of legal, design and other services required, mean that it meets the criteria in s 143(1)(b) and (f).
36. This argument was accepted by the Tribunal in Russo and Minister for Immigration [2007] AATA 2054, in which the applicant’s development of investment properties was found to create and maintain employment as well as increasing commercial activity in Western Australia.
37. In my view, Russo can be distinguished from the present case. In that case, the company was engaged in property development on a different scale and had engaged contractors and subcontractors to carry out feasibility studies, due diligence, zoning and planning approvals and was negotiating with a range of suppliers. There was clear evidence of business activity.
38. By contrast, SII has employed only one person whose role is not at all clear. Mr Weng says he has not paid salaries to his son or two associates involved in the company because it has not yet made a profit but I do not accept this explanation. What they have done by way of “research” has been ad hoc and has none of the characteristics of employment in any real sense. SII may have engaged various services in developing the properties but that is the case with any property development including private property development.
39. Nor am I satisfied that SII’s activity is resulting, or will result, in an increase in commercial activity and competitiveness within sectors of the Australian economy. Its activity is similar to that in Tan and Anor and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 808 where the Tribunal found the impact of an “isolated property development transaction” on any employment, commercial activity or competitiveness to be “marginal at best”.
40. I am not satisfied that SII is carrying on an eligible business within the meaning of the Act.

IS MR WENG INVOLVED IN THE DAY TO DAY MANAGEMENT OF THE BUSINESS

41. Mr Weng is still the general manager of his company in China, although he does not draw a salary and says he is winding down his activities there in order to be more involved in his business in Australia. He has spent approximately 100 days over ten or so visits to Australia since March 2006. On each occasion he says he has investigated and researched business opportunities. He says he spends about 10 hours each week on SII business.
42. The Minister contends that Mr Weng’s business interests and his senior role in a large company in China occupy him and that the activity of SII, such as it is, could not occupy him for 10 hours each week.
43. Mr Weng contends, and I accept, that property development by its nature may involve more “hands-off” management than some other businesses. I accept that a business can be managed from overseas and that daily involvement may not be necessary. Nor is Mr Weng required to cease his business in China, or spend most of his time on SII business, or in Australia (see Russo at 133-147; see also Oetama Oh and Minister for Immigration and Citizenship [2009] AATA 552).
44. I accept that Mr Weng communicates by telephone, email and fax with his son and at different times has communicated with Mr Lin and Mr Qau about SII’s property development, and with Mr Xiang Lan about the kitchen appliance business. He is clearly interested and involved in the company’s activities.
45. I am prepared to accept that Mr Weng is involved in the day to day management of SII.

HAS MR WENG MADE GENUINE EFFORTS

46. Although I find there is ground for cancelling Mr Weng’s visa under s 134(1)(a) of the Act, it may not be cancelled so long as he meets each of the “genuine efforts” criteria in s 134(2).
47. Section 134(3) provides that the factors which may be taken into account in determining whether a “genuine effort” has been made include:

(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;

(j) 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).

48. Mr Weng relies on his original business plan, coupled with his sound business experience in China, his trips to Australia and the research he has conducted while here, and the transfer to Australia of assets worth over $2 million as evidence of his genuine efforts to satisfy the requirements of the Act. The Minister maintains his efforts lack the necessary vigour and determination.
49. “Genuine” is an ordinary word that should be given its ordinary meaning. The relevant meaning provided by the Oxford English Dictionary is “having the character or origin represented; real, true, not counterfeit, unfeigned, unadulterated”.
50. In Yam v Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 283 the Tribunal said [at 53] that “genuine” in s 134(2) means effort that is more than “superficial or token” and I agree.
51. In a section of the statement accompanying his visa application headed “Moving My Business and Assets to Australia”, Mr Weng said his plans were in the very early stage “until I am personally able to move to Australia”. He said that, in the short term, he would open bank accounts, set up an office and “arrange for networking of investment and products”; depending on these, he could “formulate more exact budgets and make realistic future orders for product shipments”. He referred to his decision to move to Canberra and to “fine-tuning” his plans “when I arrive in Canberra”.
52. In a written statement to the respondent on 18 March 2009 Mr Weng said he was “currently in the process of transferring his business interests from China to Australia” but is could not happen overnight. When questioned by the Tribunal, Mr Weng maintained that, by “transferring” his interests he meant that he would conduct business in both China and Australia.
53. I do not accept Mr Weng’s explanation. Even allowing for some language difference, his statements clearly indicate his intention to move here to live and to transfer his assets here. He has not done either.
54. I accept that Mr Weng’s plans have changed over time, and I do not suggest that moving to Australia or transferring assets here is necessary for him to satisfy s 134(1)(a) or (b), but that he has not done so tends to undermine his claims and his credibility generally.
55. In a written statement in October 2009, Mr Weng said that, by February 2009, his investigations had led him to decide against pursuing a coffee shop but to “go ahead” with manchester, household and kitchen items, health food and “souvenir/tourism”. His statement concluded that he planned to continue in real estate and, in the meantime, he would continue to develop the health products and souvenir/tourism area as well as the sale of kitchen appliances.
56. Mr Weng gave oral evidence that, other than property development, only the kitchen appliance business is now proceeding. He maintained that, by “go ahead” he meant only that he would continue to research and investigate the other possibilities. I do not accept his explanation and, moreover, Mr Weng conceded that, other than the kitchen appliance store, he has not researched the other options since February 2009.
57. Mr Weng’s proposal for the kitchen appliance business still appears vague and unformed. On 26 November 2009, SII applied to register a trademark for the business and Mr Weng says he is currently negotiating to lease premises in Canberra. He has produced correspondence from a real estate agent about a property which he plans to visit next week. He now claims that he plans to open a second outlet as well. He has produced a Letter of Employment Interest signed on 10 November 2009 by which Mr Xiang Lan is to receive a salary and profit, and holds a 30% share in the kitchen appliance business.
58. However, when questioned by the Tribunal, Mr Weng was at first surprisingly vague about his imminent investment in this venture and indicated a figure of $30,000. He then said he would be investing $600,000 by way of loan to Mr Lan. It is very difficult to reconcile this apparent lack of planning with genuine business activity, particularly after more than three years of investigation and research. I accept the Minister’s contention that Mr Weng plans to lend money to Mr Lan to operate a business and to receive a return on the loan. It does not follow that any involvement by SII constitutes a genuine effort to engage in business activity.
59. I am not satisfied that Mr Weng has made a genuine effort to obtain a substantial ownership interest in an eligible business such that his visa should not be cancelled.

SHOULD THE RESIDUAL DISCRETION BE EXERCISED IN MR WENG’S FAVOUR?

60. The residual discretion is broad but is to be exercised in the context of the legislation in which it is given: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40.
61. The discretion is designed to give the decision-maker flexibility to deal with unanticipated circumstances: Pan and MIAC [2007] AATA 1724 [24]. Factors that might be taken into account include where the applicant needs more time to complete genuine efforts: Koosasi v Minister for Immigration and Citizenship [2007] AATA 1311. It is always possible that circumstances may arise beyond the applicant’s control or which could not reasonably have been anticipated.
62. Mr Weng contends that the unanticipated circumstances in his case were that his research led him to abandon his original idea for an electrical retail store, following which further research was necessary, leading to a delay in the establishment of his business.
63. For the reasons I have already given, I do not accept that Mr Weng has made genuine efforts to establish a business here. The fact that he has still not established a business is because he continues to look for investment opportunities and that may take some time. I do not accept there has been unexpected delay or that there is any other reason that the discretion should be exercised in Mr Weng’s favour.
64. The decision under review is affirmed.
    

I certify that the 53 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Jill Toohey.

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

Diana Weston, Associate

Date of hearing: 12 January 2010

Date of decision: 29 January 2010

Representative for the Applicant: Regina Cheung, solicitor (Johninfo & Associates)

Counsel for the Applicant: Nick Poynder, barrister

Representative for the Respondent: Alice Linacre, solicitor (Clayton Utz)