Hofbraeuhaus Pty Ltd (Migration)

Hofbraeuhaus Pty Ltd (Migration) [2020] AATA 1570 (28 April 2020)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT:  Hofbraeuhaus Pty Ltd
CASE NUMBER:  1924630
DIBP REFERENCE(S):  OPF2019/5048
MEMBER:Sheridan Lee
DATE:28 April 2020
PLACE OF DECISION:  Melbourne
DECISION:The Tribunal sets aside the decision under review and substitutes a decision not to take one or more of the actions specified in s.140M of the Migration Act 1958.

Statement made on 28 April 2020 at 5:11pm

CATCHWORDS
MIGRATION – standard business sponsor – bar from sponsoring more people – failure to satisfy sponsorship obligations – records of payments to sponsored employees – payments to two employees not documented – error regarding advance payment to one employee discovered when calculating outstanding entitlements – late notification to department of employee’s cessation of employment – steps taken to rectify past failures and ensure future compliance – payment of fine – nomination application refused – decision under review set aside
LEGISLATION
Migration Act 1958 (Cth), ss 140L(1)(a), 140M, 375A
Migration Regulations 1994 (Cth), rr 2.82(2), (3)(a), 2.83, 2.84, 2.89(2)

STATEMENT OF DECISION AND REASONS
APPLICATION FOR REVIEW

This is an application for review of a decision made by a delegate of the Minister for Immigration to take an action under s.140M of the Migration Act 1958 (the Act) in relation to the applicant’s sponsorship.
The applicant was approved as a standard business sponsor on 28 August 2015. On 14 August 2019, the delegate decided to bar Hofbraeuhaus under s.140M of the Act from sponsoring more people under the terms of the approved standard business sponsorship until 28 August 2020 on the basis that it failed to satisfy its sponsorship obligations.
Mr Daniel Rizk, CEO of Hof Hospitality Group, appeared before the Tribunal via telephone on 1 April 2020 to give evidence and present arguments on behalf of the applicant. The applicant was represented in relation to the review by its registered migration agent.
For the following reasons, the Tribunal has decided to set aside the decision under review and substitute a decision not to take one or more of the actions specified in s.140M.
CONSIDERATION OF CLAIMS AND EVIDENCE
Sections 140K, 140L and 140M of the Act provide for the imposition of sanctions on approved sponsors in certain circumstances.
Under s.140M, if prescribed circumstances exist, the Minister (and the Tribunal on review) may take one or more of the following actions:
·cancelling the sponsorship approval in relation to a class to which the sponsor belongs;
·cancelling the sponsorship approval for all classes to which the sponsor belongs;
·barring the sponsor for a specified period from sponsoring more people under the terms of any existing approval; and
·barring the sponsor for a specified period from making future applications for sponsorship approval in relation to one or more classes of sponsor.
For these purposes, the circumstances are prescribed in r.2.89 - r.2.94B and include circumstances in which the Minister, or tribunal on review, is satisfied there has been: a failure to satisfy a sponsorship obligation; provision of false or misleading information; sponsorship application or variation criteria no longer met; a contravention of the law; unapproved changes to a program; a failure to pay additional security; a failure to comply with certain terms of an agreement; or a failure to pay medical and hospital expenses.
Where a prescribed circumstance has been found to exist, the regulations prescribe criteria that must be taken into account when determining what action, if any, to take: r.2.89 – r.2.94B. These criteria, as they relevantly apply to the circumstances of this case are set out in the attachment to this decision.
Procedural issues
In May 2019, the Department undertook monitoring of the applicant. As part of the monitoring exercise, a recommendation report was produced and a copy of that report was provided to the Tribunal on review.
On 6 February 2020, the Tribunal wrote to the applicant to advise that the Minister for Immigration (or a delegate) may place restrictions on certain material given to the Tribunal by the Department. This is done by certifying in writing that disclosure of the material is contrary to the public interest or by notifying the Tribunal that it was given in confidence to the Department. In this matter, the Department issued a certificate over a document supplied to the Tribunal under s.375A of the Migration Act 1958 (the Act). A copy of the certificate issued on 18 August 2019 was attached to the correspondence for reference.
The Department sought to restrict disclosure of document OPD2019/233832 on the basis that disclosure of the information would be contrary to the public interest because it would normally be exempt from disclosure under Part IV of the Freedom of Information Act 1982 (Cth) (FOI Act). The Tribunal reviewed the material sought to be restricted by the certificate. Specifically, the Department sought to restrict the disclosure of the sponsor monitoring recommendation report.
Where a valid certificate has been issued under s.375A of the Act, the Tribunal must do all things necessary to ensure that the document or information is not disclosed to any person other than a member of the Tribunal as constituted for the purposes of the particular review. There is no discretion for the Tribunal to disclose the information contained in the documents, even if it would consider it reasonable in the circumstances.
In the current matter, the Tribunal considers that the certificate is not valid as insufficient information was provided in respect of the purported public interest in restricting disclosure. In particular, the Tribunal notes that the certificate does not specify which provision of the FOI Act would exempt the document from release or how the release would be detrimental to the public interest.
The Tribunal is of the view that the referral report does not reveal confidential investigation methods or the personal information of third parties. Further, there is no information before the Tribunal to indicate that the release of the information would prejudice the effectiveness of Departmental investigative methods or the enforcement of laws. The Tribunal therefore determined that it was possible for the material to be released to the applicant. A copy of the relevant document was attached to the correspondence of 6 February 2020.
In forming this view, the Tribunal considered that much of the information was known by Hofbraeuhas as it was set out in both the Notice of Intention To Take Action (NOITTA) and the decision of the delegate. In addition, the information relates directly to the alleged breaches of migration law by Hofbraeuhas and the release of the information assisted to provide the applicant with natural justice.
Does a circumstance for the taking of an action exist?
On 20 May 2019, the Department issued a notice requesting a range of documents and information relating to the company’s obligations as a standard business sponsor for the 12 month period 20 May 2018 to 2019. Following some discussions between the delegate and Mr Rizk, the delegate requested further information about the final payments made to sponsored employee, Amir Shahzad, and the cessation of his employment.
On 4 June 2019, Mr Rizk advised the delegate that Mr Shahzad received a pay advance in January 2018. The company had intended to reflect this in his pay records, but neglected to do so. The error was only discovered when calculating Mr Shahzad’s outstanding leave on the cessation of his employment in August 2018. On 7 June 2019, Mr Rizk supplied evidence that the applicant had informed the Department of Mr Shahzad’s cessation of employment via email on 3 December 2018.
The applicant supplied the Department with ANZ Bank records showing payment of money to a third party payroll provider. The statement contained only the total amount paid in fortnightly salaries to the third party, not the individual payments to employees. In addition to the ANZ statement, some personal bank statements for sponsored employees were provided. However, they did not include the personal bank statements of Amir Shahzad and NAB transaction slips relating to Andreas Knoll were provided for only 14 and 18 March 2019.
The Department sent a NOITTA to the applicant on 3 July 2019. The NOITTA outlined that the Department intended to take action on the basis that Hofbraehaus had failed to satisfy its sponsorship obligations: r.2.89. In particular, the applicant failed to comply with its obligations to keep and provide records (r.2.82 and r.2.83) and its obligation to notify the Department about certain events (r.2.84).
On 17 July 2019, the applicant responded to the NOITTA. The response conceded that the applicant did not comply with its sponsorship obligations, however advised that the company had taken reasonable steps to rectify the past failures and implement processes to ensure future compliance. The letter outlined that $2,000 was paid to Mr Shahzad in January 2018. Accurate records of the payment were not maintained. The company has since implemented a policy not to provide pay advances to employees in future. In addition, the company has automated its scheduling system to avoid use of manual spreadsheets and ensure that obligations are met in a timely fashion. Finally, the letter acknowledged that Mr Shahzad ceased employment on 2 August 2018, but the Department was not notified until 3 December 2018.
As outlined in the Departmental decision record, which was provided to the Tribunal by the applicant, the delegate found that the applicant failed to satisfy the following sponsorship obligations:
·Regulation 2.82: the applicant did not maintain records of a salary advance paid to sponsored employee, Amir Shahzad.
·Regulation 2.83: the applicant did not provide independently verifiable evidence of payments to sponsored employees Andreas Knoll and Amir Shahzad for the monitoring period: 20 May 2018 to 20 May 2019.
·Regulation 2.84: the applicant did not notify the Department of the cessation of sponsored employee Amir Shahzad’s employment within the prescribed timeframe.
At the Tribunal hearing, Mr Rizk gave evidence consistent with his earlier correspondence to the Department. On the basis of this evidence, the Tribunal finds that the applicant failed to keep a record of the salary advance paid to Amir Shahzad, in contravention of r.2.82(2). In addition, the applicant did not notify the Department of the cessation of Amir Shahzad’s employment within the prescribed timeframe of 28 days in contravention of r.2.84(3)(a).
The Minister may take one or more of the actions in s.140M of the Act if satisfied the sponsor has failed to satisfy a sponsorship obligation referred to in Division 2.19 of the Regulations: r.2.89(2).
In respect of r.2.83, the delegate noted that independently verifiable evidence of wages paid to other sponsored employees was provided to the Department, however it was not provided in respect of Andreas Knoll and Amir Shahzad. A review of the Departmental file shows that the applicant supplied payslips and PAYG summaries for all sponsored employees and bank records showing the total amount transferred to its third party payroll provider. However, while personal bank records were provided to evidence receipt of payment for the majority of employees, they were not provided in respect of the relevant two employees. There was no evidence to suggest that Hofbraehaus underpaid any employees and the delegate’s calculations, supplied to the Tribunal on review, found the total amounts transferred to the payroll provider to be correct, with the exception of the variance caused by the cash advance. As such, the Tribunal considers that it was possible to verify the amounts paid on the basis of the records supplied and there is no breach of r.2.83.
Action to be taken
For the reasons above, the Tribunal is satisfied that a relevant circumstance for s.140L(1)(a) exists. Accordingly, it is necessary to consider whether one or more of the actions mentioned in s.140M should be taken. In considering what action to take, the Tribunal has had regard to the prescribed criteria, as extracted in the attachment to this decision. An outline of the considerations as relevant in the current matter is provided below.
Mr Rizk gave evidence that the Hofbraehaus started as a family owned business in Melbourne in 1968. It has been operated as a company under the current ownership since approximately 2008. The company was first approved as a standard business sponsor on 28 August 2015. Since that time, the applicant has sponsored four employees on Subclass 457 visas and two employees on Subclass 482 visas. In addition to sponsored visa holders, Mr Rizk advised that the company has employed a number of working holiday makers. No previous enforcement action has been taken in respect of the sponsor.
Departmental records indicate that the applicant was cooperative and responsive to the delegate throughout the monitoring exercise and there is no information before the Tribunal to suggest prior compliance issues.
While the applicant failed to keep an accurate record of the cash advance paid to Mr Shahzad, the deficiency was identified and rectified by the applicant on reconciliation at the end of his employment period. There is no evidence to suggest that Mr Shahzad did not receive the correct entitlements. The Tribunal considers the failure to satisfy record keeping obligations to be relatively minor in the circumstances.
At the Tribunal hearing, Mr Rizk acknowledged that the applicant had failed to notify the Department that Mr Shahzad had ceased employment within the prescribed 28 days, instead taking approximately four months to do so. The Tribunal accepts that the cessation of employment occurred during the busy Oktoberfest festival and this contributed to the delay. Nevertheless, this is a lengthy delay and the Tribunal has taken this into consideration in determining the action to be taken.
The Tribunal considers that the two identified contraventions were inadvertent and the applicant has since purchased a new automated rostering and payroll system named Deputy to avoid the use of manual spreadsheets and reduce the likelihood of user error in future. In addition, the applicant has implemented a policy of not approving cash advances. This was self-initiated, not requested by the Department.
The Hofbraehaus is currently closed due to trading restrictions designed to reduce the spread the COVID-19 virus. However, when they re-open for trading, Mr Rizk expressed a desire to sponsor a number of the company’s current temporary visa holders for permanent visas. He gave evidence that the business relies on employees with experience in Bavarian cuisine, which can be difficult to find amongst Australian citizens. Mr Rizk was concerned that the company would not be in a position to sponsor employees in future if subjected to a ban. He explained that the company has had a nomination application for a Subclass 186 visa refused on the basis that the contraventions were considered as adverse information.
The Tribunal notes that the applicant was required to pay a fine of $6,300 for failure to comply with its sponsorship obligations and that it has done so. Considering the totality of the circumstances, and having regard to the prescribed criteria the Tribunal finds that none of the actions under s.140M should be taken.
DECISION
The Tribunal sets aside the decision under review and substitutes a decision not to take one or more of the actions specified in s.140M of the Migration Act 1958.
Sheridan Lee

Member
ATTACHMENT – Extract from the Migration Regulations 1994
2.89   Failure to satisfy sponsorship obligation
…
(3) For paragraph 140L(1)(b) of the Act, the criteria that the Minister must take into account in determining what action (if any) to take under section 140M of the Act in relation to the circumstance mentioned in subregulation (2) are:
(a)    the past and present conduct of the person in relation to Immigration; and
(b)    the number of occasions on which the person has failed to satisfy the sponsorship obligation; and
(c)     the nature and severity of the circumstances relating to the failure to satisfy the sponsorship obligation, including the period of time over which the failure has occurred; and
(d)    the period of time over which the person has been an approved sponsor; and
(e)     whether, and the extent to which, the failure to satisfy the sponsorship obligation has had a direct or indirect impact on another person; and
(f)     whether, and the extent to which, the failure to satisfy the sponsorship obligation was intentional, reckless or inadvertent; and
(g)     whether, and the extent to which, the person has cooperated with Immigration, including whether the person informed Immigration of the failure; and
(h)    the steps (if any) the person has taken to rectify the failure to satisfy the sponsorship obligation, including whether the steps were taken at the request of Immigration or otherwise; and
(i)    the processes (if any) the person has implemented to ensure future compliance with the sponsorship obligation; and
(j)     the number of other sponsorship obligations that the person has failed to satisfy, and the number of occasions on which the person has failed to satisfy other sponsorship obligations; and
(k)    any other relevant factors.
…

[2020] AATA 1570

28 April 2020

Key Legal Topics

Areas of Law

Immigration

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction

Remedies

Natural Justice