Residual Discretion Exercised to Overturn Business Visa Cancellation

 
 

Even if all the statutory bases for cancelling a business visa are met (ie failure to have an ownership interest and not being involved in the business) there is a residual discretion not to cancel the visa. In Yang v MIAC [2008] AATA 1171 (24.12.08) this was exercised in favour of the business visa holder:

Mr Yang is a successful businessman who operates and substantially owns investment and development businesses in China. Mr Yang has commenced development of a business model based on the export of Australian wine to China. This nascent enterprise is essentially run from China; YTD Australia is the Australian entity Mr Yang established for the purposes of this new enterprise. YTD Australia, however, has not yet achieved the status of a business, conducting repetitive and continuing activities for profit in Australia. As owner, Mr Yang has retained any profit from YTD Australia export transactions in China. For this reason I have found that Mr Yang has not obtained a substantial ownership interest in an eligible business in Australia. Mr Yang has made only minimal efforts to develop business in Australia, through YTD Australia or otherwise since the grant of his visa. He has not made genuine efforts of the kind and character contemplated by section 134(2) of the Act. There is, however, a reasonable and satisfactory explanation why he has failed to achieve these requirements of his business skills visa. That explanation involves complex and ongoing litigation in China that has required his presence and has tied up his personal assets since September 2004. These circumstances are apart from the usual course; they were unforeseen when Mr Yang applied for and was granted his business skills visa and they have adversely impacted upon his capacity to satisfy his visa requirements. I have found that Mr Yang’s explanation is reasonable, supported by satisfactory and reliable evidence. Mr Yang’s particular circumstances since September 2004 are exceptional. On balance, this is sufficient to warrant Mr Yang being given more time in which to comply with his visa obligations. For that reason the discretion not to cancel his visa will be exercised and his visa and the secondary visas held by his immediate family members will be reinstated.

It should be noted, however, that if Mr Yang fails to comply with the conditions of his visa in the future the general power to cancel his visa may be exercised. That, of course, is a not a matter that can properly be dealt with now. It will be for the Minister to consider in the future, if it is necessary or desirable to do so in the particular circumstances.

An obvious practice point in this case is that it is preferable for the Australian based company to retain its profits in Australia from any business activities conducted from Australia.

Another successful residual discretion case is Jones v MIAC [2009] AATA 11 (8.1.09).  Here the AAT accepted that the application had the relevant ownership interest but it did not accept that he was involved in the day to management of the business.  Mr Jones was a migration from Zimbabwe and had invested $200,000 to obtain an 8% interest in a company.  Even though it was only 8% the AAT accepted it was ‘substantial’.

Here is how the AAT viewed his involvement in the business:

          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.”

          I find that the above descriptions accurately reflect the nature of Mr Jones’ activities in attending ISA’s weekly management meetings.

          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.

          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.

          Mr Jones’ activities relating to ISA and Gilete TSB involved him working approximately 7 hours a week.

Based on the above the AAT concluded:

          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.

          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.

But the AAT nevertheless exercised its discretion not to cancel the visa:

          In my opinion, there are a number of factors which count in favour of exercising my discretion not to cancel Mr Jones’ visa.

          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.

          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.

          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.

          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.

          Having regard to all of the above circumstances, I consider it appropriate to exercise my discretion not to cancel Mr Jones’ visa.

Barbara DavidsonResidual Discretion Exercised to Overturn Business Visa Cancellation