CATCHWORDS: Review of visa refusal - Long stay temporary business visa - independent executive - subclass 457.223(7A) - genuine and realistic commitment - direct and continuous involvement - make decisions - need to be temporarily resident

DECISION: The Tribunal affirms the decision under review, finding that the visa applicant is not entitled to the grant of a Temporary Business Entry (Class UC) visa.

1. This is an application for review of a decision to refuse to grant a visa made by a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs (the delegate) on 11 June 2002.

2. Mr Mohammed Allabadi (the visa applicant), a national of Palestine, born on 3 March 1955, applied for subclass 457 Independent Executive (Further Application Onshore) (Class UC) visa on 18 January 2002.

3. The visa applicant lodged a valid application for review to the Tribunal on 10 July 2002. The decision is reviewable by the Tribunal and the application for review has been properly made by a person with standing to apply for review.

4. The Migration Act 1958 (the Act) and the various Regulations made under that Act, principally the Migration Regulations 1994 (the Regulations), provide for different classes of visas, and the criteria for the grant of visas. In reaching a decision, the Tribunal is bound by the Act, the various Regulations and written directions issued by the Minister under section 499 of the Act. Some matters may be the subject of policy, as found in publications such as the Procedures Advice Manual 3 (PAM3) and the Migration Series Instructions (MSIs), produced by the Department of Immigration and Multicultural and Indigenous Affairs (the Department). The Tribunal is required to have regard to policy and apply it unless there are cogent reasons for departing from policy.

5. The Tribunal has the power to affirm, vary or set aside a decision to refuse to grant a visa. It also has the power to remit an application for a visa to the Department for reconsideration. Such a remittal may be accompanied by directions that a visa applicant meets one or more of the criteria for a visa. It is then a matter for the Minister or a delegate to consider any remaining criteria. A review by the Tribunal is generally limited to a consideration of whether a visa applicant meets one or more essential criteria, with the application remitted or the decision affirmed on that basis.

6. The criteria and policy immediately relevant to this review are:

Part 457 of Schedule 2 to the Regulations

7. The Tribunal generally has regard to the Regulations as they stood at the time of a visa application. However, subsequent amendments may apply in some circumstances.

D1 - Departmental case file CLF2002/3156, folio numbered 1-196.

9. The Tribunal listed the review applicant's application for hearing on 27 June 2003. However the visa applicant did not return the completed `Request for hearing' form nor did he attend the Tribunal on that day at the designated time. Accordingly, the Tribunal will proceed to make a decision on the review without taking any further action under subsection 362B(1) of the Act. A summary of the chronology of evidence based on the documents provided to the Tribunal is set out below.

10. The visa applicant is married to Amal Salim Allabadi. They have 3 children. He and his wife own a company named `A & M Labadi Pty Ltd' which was registered in Australia on 11 August 1999. The visa applicant and his wife each hold 5 ordinary shares in the company. The main business activity of the company is property development.

11. Departmental records indicate the visa applicant first entered Australia on a subclass 676 (visitor) visa on 18 August 1997. His visitor visa was valid until 17 November 1997.

12. On 7 October 1997 the visa applicant was granted a bridging A visa, which was valid until 21 October 1998.

13. On 21 January 1998 he was granted a subclass 457 (temporary business) visa, that was valid until 21 January 2002.

14. On 18 January 2002 the visa applicant lodged an application for a 457 (independent executive further application onshore) visa.

15. On 5 February 2002 the delegate wrote to the visa applicant requesting further specific documents relating to: evidence of his active management of the company, proof of ownership of the company, proof of net assets of A$250 000, identity and relationship documents and health and character checks.

16. In response, the visa applicant provided further documentation, including:

* personal and business tax returns and notices of assessment. These indicate:- his taxable income was $2565 in 1998 ; $9 860 in 1999; $28 220 in 2000; $26 756 in 2001. His wife earned nil in 1998, 1999 and 2000; $22 363 in 2001.

* the company itself recorded a loss of approximately $15 000 in both 2000 and 2001

* A table prepared by the visa applicant's accountant on the Departmental file is consistent with the above. The accountant stated that the visa applicant and his wife experienced initial difficulties with the business, but he expected that it would improve in the future, given the experience that they had obtained.

* A joint venture agreement on the Departmental file indicates that in 2001, the business made a net profit of $44, 725 from the sale of 2 residential units that they had built at 8 Noongar Way in the suburb of Riverton. The evidence indicates that a 3rd unit was built on the same block of land, and the visa applicant and his wife retained this as their private residence. The Tribunal notes that this address is also the registered office of the business.

* The visa applicant also provided a statement from the director of Swan Developments (WA) Pty Ltd dated 4 March 2002 which states that the visa applicant and his wife advanced $120,000 to Swan by way of a loan on 8 February 2001, with the funds to be used for the development of property at Lot 213 Duke Street in Scarborough.

17. The delegate interviewed the visa applicant in Perth on 14 March 2002. At interview, the visa applicant explained that the nature of the business was property development, in that he built homes and later sold them. He said that he bought the land, looked after the building plans, arranged finance, and contracted an appropriate registered builder to build the residences. He said that he chose to do this type of work in Australia because he had previous experience in it. However, he also said that he had an advertising company overseas, which he had sold. He said that he ran the business from his home in Osborne Park, and that he worked about 40-45 hours per week. He did not employ staff directly, but engaged builders who sub-contracted labour to build the residences. He said that he only paid sub-contractors if he directly engaged them to do work on a house. He said that he planned to employ 1 builder, 1 secretary and 1 handyman so that he could meet the staff criteria for the grant of the visa. He said that he did not utilise financial planning or advertising services for the business.

18. On 11 June 2002 the delegate stated that the visa was not granted on the basis that the visa applicant did not meet certain criteria for the grant of the visa, namely the delegate was not satisfied that he had a :

* a genuine and realistic commitment to maintaining an ownership interest in the business, to having direct and continuous involvement in managing the business, and to making day-to-day decisions affecting the business (contrary to sub paragraph 457.223(7A)(c)(ii)(B) and (C) of Schedule 2 to the Regulations); or

* a demonstrated need to live in Australia to conduct the business (contrary to sub paragraph 457.223(7A)(c)(iv) of Schedule 2 to the Regulations).

19. The delegate appears to have considered that the visa applicant's business was `a passive investment business' which did not require active management by the visa applicant. The delegate noted that since August 1999, when the business commenced, the visa applicant's property development had consisted of building 3 units. Of these units 2 were sold and the remaining unit is used privately. The visa applicant expressed plans for building a further 5 units in Scarborough but is still looking for contractors. The delegate concluded that the visa applicant's main role was to search for the development site then find a building contractor to develop the site. As such the delegate decided that he was not satisfied that the visa applicant had:

... demonstrated that he maintained a direct and continuous involvement in the management of the business and also in making decisions that affect the overall direction and performance of the business from day to day.

.... This information demonstrates that there is no need for Mr Allabadi to be temporarily in Australia in order to conduct his business.

20. The visa applicant provided a written submission date 9 July 2002 when he lodged the review application form. In his submission, he refuted the delegate's findings. The visa applicant described how he worked long daily hours in the business, and how he had a direct and continuous management, and decision-making, role in it. He stated that it extended to market research, and assessing the profit potential of undeveloped properties. He also said that he closely supervised the building of residences, and had direct contact with the sub contractors. He said that since he started his business, he had managed and constructed 3 homes and currently had plans to build 9 home units in Scarborough. He said that it took about 1 year for each project to materialise. The review applicant also provided further documents regarding the completion of the three residential units in Riverton, referred to above, including correspondence with the local council. He also submitted correspondence showing that: in about July 2001, he purchased a property in Shelley, for which he had a development proposal; and in about July 1999, he purchased property in Como. He also stated that he was disadvantaged in the interview with the delegate because it was conducted in English and his wife, who speaks better English than he, was not present.

21. The visa applicant departed Australia on 19 February 2003 and as of 30 May 2003 he was yet to return to Australia.

22. At the time the visa application was lodged, Class UC contained the following subclasses: Subclass 456 (Business (Short stay)) and Subclass 457 (Business (Long stay)). Subclass 456 is not relevant because such a visa cannot be granted to a visa applicant in Australia and the visa applicant was seeking a visa for longer than 3 months using form 1066.

23. A Subclass 457 visa can be obtained on a number of grounds. The ground under which the visa application was made was as the holder of an independent executive visa who has an established business in Australia. No claims have been made in respect of the other grounds and the material before the Tribunal does not suggest that the visa applicant meets any of the other grounds.

24. As set out above the visa applicant's visa was not granted as the delegate decided that he did not meet subparagraphs 457.223(7A)(c)(ii)(B) and (C) or sub paragraph 457.223(7A)(c)(iv) of Schedule 2 to the Regulations.

25. The relevant criteria for the visa applied for are found in part 457 of Schedule 2 to the Regulations and are set out below:-

457.22 Criteria to be satisfied at time of decision

(7A) The applicant meets the requirements of this subclause if:

(ii) the applicant has a genuine and realistic commitment:

(B) to maintain a direct and continuous involvement in the management of the business; and

(C) to make decisions that affect the overall direction and performance of the business from day to day; and

(v) the applicant has demonstrated that there is need for the applicant to be temporarily resident in Australia to conduct the business.

26. The Tribunal notes that PAM relevantly provides:

First see section 27 Establishing the applicant's role in the business.

In assessing whether an applicant will have direct and continuous management role and making decisions that affect the overall direction and performance of the business, officers should take into account:

* whether the applicant will exercise responsibility within the business in terms of decision making authority, control of employees and/or budget and expenditure;

* whether such responsibility will be exercised on a continuing basis; and

* whether the applicant's skills will be fundamental to, or will exert direct influence on, the operation of the business:

Exercising management control on a continuous basis should not be interpreted as requiring the applicant to be continually present in Australia to manage the business.

* A person may set up a business in Australia while still having an active business interest in their home country.

* It is acceptable for applicants to travel outside Australia as part of their business activities.

This requirement has arisen from consultations that show that, to some extent, persons have been applying for visas 457 under the Independent executive stream to obtain temporary residence in Australia merely in order to gain access to other benefits such as employment, health, housing and education services in an English-speaking environment for dependants.

There is no sponsorship requirement for this stream. Rather, the policy intention is that the applicant go into business in Australia and that they and any dependants will be entirely self-supporting, risking their own funds in business and making private provisions for health care, education, housing and other public or community services.

27. The evidence indicates that the visa applicant has run his property development business since 1999. The documentary evidence before the Tribunal indicates that since that time he has built 3 units on a block in Riverton. He sold 2 units in 2001, and made a profit of about $40,000. He kept the 3rd unit as his residence. While the visa applicant has stated in a written submission that he has plans to build 9 home units in Scarborough, and there is evidence that in March 2002 he advanced $120,000 to develop property in Scarborough, there is no evidence of the progress of this development. Furthermore, while there is evidence that he and his wife had purchased properties in Como and Shelley (and put in a development proposal with respect to the latter), there is no evidence that this development has proceeded any further.

28. The visa applicant has claimed that he plays an active supervisory and managerial role in his development business, and that he had prior experience in property development. However, his degree of control and supervision in the building process is very limited, given that there is no evidence that he has any building qualifications and direct building experience. The visa applicant contracts to building companies to build the residences for his company. The visa applicant has been outside of Australia since 19 February 2003. This would tend to suggest that if he is still running his business, which he is managing to do so from outside Australia.

29. The Tribunal has considered all of the above evidence and the visa applicant's submission and finds on balance that it is not satisfied that:

* the applicant has a genuine and realistic commitment to maintain a direct and continuous involvement in the management of the business or make decisions that affect the overall direction and performance of the business from day to day; and

* the applicant has demonstrated that there is need for the applicant to be temporarily resident in Australia to conduct the business.

30. As a result the Tribunal finds that the visa applicant does not meet sub paragraphs 457.223(7A)(c)(ii)(B) and (C) or sub paragraph 457.223(7A)(c)(iv) of Schedule 2 to the Regulations.

31. Given these findings, and earlier observations in respect of the other subclasses, the Tribunal has no alternative but to affirm the decision under review as the visa applicant does not meet essential criteria for the grant of the visa applied for.

32. The Tribunal affirms the decision under review, finding that the visa applicant is not entitled to the grant of a Temporary Business Entry (Class UC) visa.