Kraues and Migration Agents Registration Authority
[2016] AATA 1086
•23 December 2016
Kraues and Migration Agents Registration Authority [2016] AATA 1086 (23 December 2016)
Division
GENERAL DIVISION
File Number
2014/5722
Re
Kurt Kraues
APPLICANT
And
Migration Agents Registration Authority
RESPONDENT
DECISION
Tribunal Senior Member J F Toohey
Date 23 December 2016 Place Sydney The Tribunal affirms the decision under review.
.........................[sgd]...............................................
Senior Member J F Toohey
CATCHWORDS
PRACTICE AND PROCEDURE – jurisdiction to review decision to cancel registration as migration agent – whether Tribunal has power to make declaration of invalidity – whether
applicant denied procedural fairness - onus of proof in administrative proceedings
IMMIGRATION AND CITIZENSHIP – migration agent – cancellation of registration –whether applicant not a person of integrity or otherwise not a fit and proper person to give immigration assistance decision – whether applicant had not complied with the Code of Conduct – immigration assistance – decision under review affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975, ss 28, 33, 43(1)
Migration Act 1958, ss 276, 303, 308, 309, 314, 317
Migration Agents Regulations 1998, Sch 2, reg. 8
CASES
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Brackenreg v Comcare (2010) 187 FCR 209
Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd [1979] FCA 21; (1979) 24 ALR 307
Comcare v Power [2015] FCA 1502
Issa and Migration Agents Registration Authority [2015] AATA 451
McDonald v Director-General of Social Security [1984] FCA 57; (1984) 1 FCR 354Zubair and Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 248
SECONDARY MATERIALS
Code of Conduct for migration agents, clauses 2.1, 2.23, 5.1, 5.5, 7.1, 7.2, 7.4 and 7.5
REASONS FOR DECISION
Senior Member J F Toohey
23 December 2016
Background
This decision concerns an application by Mr Kurt Kraues for review of a decision by the Migration Agents Registration Authority (the Authority) to cancel his registration as a migration agent.
On 24 October 2014, following an investigation into a complaint that Mr Kraues had failed to perform services for which the complainants had paid him approximately $200,000 in professional fees, the Authority cancelled his registration in accordance with s 303(1) of the Migration Act 1958 (the Act). The Authority found that Mr Kraues was not a person of integrity or was otherwise not a fit and proper person to give immigration assistance, and that he had not complied with multiple clauses of the Code of Conduct for migration agents, in contravention of ss 303(1)(f) and (h) of the Act.
This matter has a long history which it is necessary to set out in some detail.
The complaint
On 28 November 2012, the Authority received a complaint by Mr Mark Karu and 14 others who had been employed by Corestaff Pty Limited (Corestaff), a labour hire firm, to work for one of its clients in Australia. The complainants had been recruited in Papua New Guinea and came to Australia in May 2012 as holders of Temporary Work (Skilled), subclass 457 visas (subclass 457 visas). They alleged they had paid Mr Kraues for assistance to become Australian permanent residents and had received no services in return.
On 23 November 2012, Corestaff notified each of the complainants that, due to “the severe downturn in the mining industry”, his or her services were no longer required, that efforts to find them alternative employment had been unsuccessful and, consequently, Corestaff was cancelling their nominations. As their visas were conditional on employment in Australia, the complainants had no basis on which to remain in Australia and were no longer eligible to apply for permanent residency. By that time they had paid, collectively, more than $200,000 by way of payroll deductions to Kraues Law Trust Account pursuant to a “Retainer Agreement” which “[made] available the services of Kraues Law to provide immigration assistance”.
Shortly after receiving Corestaff’s letter, Mr Karu and other complainants met with Mr Kraues. They advised him they were terminating their agreements with him and asked him to refund the fees they had paid. Mr Kraues declined to do so.
The complaint to the Authority alleged:
[Corestaff] had been advised by Kraues Law to start deducting money to cover our [permanent residency] Application. This was done with $825 up front and 78 weekly payments of $82.50. As we have had no communication from Kurt Kraues during our stay in Australia, we have decided to terminate our agreement with Kurt and deal with the local Agent. We have all contacted Kurt via email, text message, phone, and in person but Kurt has ignored our attempts at communication. We have met with Kurt once to organise our monies repaid but he has refused to answer our direct questions. Our sponsorship in Australia has now been terminated and we’ll be going back to PNG. …
The complainants attached a document headed “Terms and Schedule of Fees: Migration Agent Regulations (1998)” which described itself as a “Retainer Agreement – Single Sum Fixed Fee”. On 11 December 2012, Mr Kraues sent letters to each complainant stating there appeared to be “some confusion about the nature of our agreement”. The letters stated:
The total retainer fee, although structured to be paid weekly, is fully payable by you under the agreement. Termination of this agreement by you … does not extinguish the outstanding balance. Please refer to the terms of engagement for item 4(j)(v).
The letters set out the “Total Retainer Fee” of $7,260 and the “Balance Owing”, after deductions for weekly fees paid to date “pursuant to your written salary deduction (as provided by Corestaff)”. Copies of the letters are before the Tribunal. They show outstanding amounts from $6,270 to $4,290. The letters asked, if the complainant was unable to continue to pay the weekly instalments of $82.50, “what alternative payment arrangement you have in mind?”.
The Authority’s investigation
By email on 6 December 2012, the Authority asked Mr Kraues whether he intended to refund the fees paid and, if not, the basis on which he was retaining them. Mr Kraues asked the Authority to request this information by way of a notice under s 308 of the Act (by which the Authority may require an agent to provide information by one or more means) so that he “might avail [himself] of the statutory protections incorporated in the statutory scheme”.
On 15 January 2013, the Authority issued a notice under s 308 outlining Mr Karu’s complaint, advising that 14 others whose circumstances were the same as his were also complainants, and seeking Mr Kraues’ response by 29 January 2013 to 12 questions. The notice summarised the complaint as follows:
·You advised Corestaff to make deductions to cover permanent residence applications. There was an initial payment of $825 followed by 78 weekly payments of $82.50.
·The miners terminated their agreements with you as they had no communication with you since they arrived in Australia.
·They wanted to organise a refund of the fees paid to you, but you ignored their attempts to contact you. When they did get to meet you, you refused to answer their questions.
·Their sponsorships have been terminated and they are seeking a refund of the fees paid to you.
Mr Kraues did not respond to the notice.
On 12 February 2013, the Authority advised Mr Kraues by email that it considered the issues raised in the complaint did not relate to the provision of immigration assistance and, on that basis, the matter was outside its jurisdiction, the complaint would be closed and no further action would be taken. The letter reminded Mr Kraues of the “obligations under Part 7 of the Code, which relate to financial duties”.
Investigation re-opened
On 19 June 2013, the Authority notified Mr Kraues that, “[f]ollowing a review of the complaint” it had been re-opened because the Authority considered the circumstances did relate to the provision of immigration assistance in that:
Mr Karu and the other miners had formed an intention to apply for permanent residence and had engaged your services as a migration agent with that aim in mind. The retainer agreements … signed by the miners anticipate that an application for a visa would be lodged and that immigration assistance would be provided by you.
The Authority reiterated the complaint and requested Mr Kraues’ response to the s 308 notice issued in January 2013. He was granted several extensions of time to respond so that he could obtain information from the Department of Immigration and Border Protection (the Department) pursuant to a Freedom of Information request. Documents in answer to that request were apparently sent to Mr Kraues on 10 October 2013.
Mr Kraues’ response to the s 308 notice
On 11 December 2013, Mr Kraues responded to the s 308 notice. His response to several questions was: “The premise of the question is not applicable to the retainer agreement”.
In response to the question: “Have any monies been withdrawn from the clients’ account relating to any of the miners? If so, please provide copies of the invoices to each miner relevant to each withdrawal”, Mr Kraues wrote: “Yes, retainer payments have been withdrawn in accordance with the terms of the miner’s (sic) retainer agreement”.
Mr Kraues went on to assert that the Authority’s use of the s 308 was an “abuse of process” and he questioned its power to reopen the complaint. Nevertheless, he stated:
The terms of the retainer agreement namely “to be available to provide immigration assistance” were met.
Further:
The terms of the retainer agreement, retain my services as a migration agent ‘to be available’ to provide immigration assistance over a twenty-four months period and do not relate to ‘the actual provision’ of the assistance. … Under the terms of the retainer agreement, any subsequent immigration assistance, if so provided, is charged on a time and attendance basis, in accordance with the hourly rate specified in the agreement, and requiring a separate service agreement that specifies the type of work to be performed. The circumstances, with reference to the terms of the retainer agreement, do not relate to the provision of immigration assistance and brings into question the jurisdiction of the authority to reopen the complaint.
The second s 308 notice
On 21 February 2014, the Authority notified Mr Kraues that it did not consider his responses be adequate and issued a second notice under s 308.
The notice advised that the miners who were party to the present complaint had said they were part of a group of some 70 Papua New Guinea nationals who had come to Australia on subclass 457 visas, and information provided by the Department indicated that Mr Kraues had previously acted in those matters as well. The scope of the requests in the notice had therefore been “extended to include all clients who have or had a similar agreement to Mr Karu’s”. The notice asked:
1Could you please explain your contractual arrangement with Corestaff in relation to the miners.
2Could you please list all of your current or former clients with similar agreements to Mr Karu’s.
3What type of account are the clients’ money paid to you by the miners currently held in?
4What is the current status of each of the miners’ monies in that account?
…
5Could you please provide the detail of any withdrawals made and the services that were provided for those withdrawals? Please ensure that you provide copies of the invoices to each miner relevant to each withdrawal.
…
6Please provide the details of any requests for refunds that have been made by the miners?
7Please provide the details of the outcome of any refund requests?
On 17 April 2014, Mr Kraues sent an email to the Authority advising that his response to the notice was attached. The Authority replied to say that no document was attached to his email. Mr Kraues did not respond to that email.
Federal Circuit Court proceedings
On 30 April 2014, Mr Kraues filed documents with the Federal Circuit Court seeking a declaration to the effect that the Authority’s decision to issue a second notice was contrary to law and he was not required to respond to it. He maintained the requests in it were vague, that responding would involve “expense, time and inconvenience”, that he was unable for various reasons to respond, and in any event, that the agreement with the miners required nothing more of him than to be “available to give immigration assistance”.
On 16 September 2014, the Authority sent Mr Kraues a notice under s 309(2) of the Act advising that, for the reasons in the notice, it was considering cautioning him, or suspending or cancelling his registration under s 303(1). The notice invited Mr Kraues’ response by 14 October 2014.
Mr Kraues’ then solicitor wrote to the Authority on 14 October 2014 asking for an extension of time in which to reply to the s 309(2) notice on the basis that Mr Kraues “intends to seek a judicial review” of the decision to exercise those powers, and proceedings were already on foot in the Federal Circuit Court in relation to “the purported exercise of powers under section 308”. Further, that an injunction was to be sought in the Federal Circuit Court seeking “inter alia, a stay on the requirement to reply until resolution of the section 308 matters”.
The Authority allowed Mr Kraues an extension of time to respond to the s 309 notice until 22 October 2014. He did not respond by that date and, on 24 October 2014, the Authority issued a determination, cancelling his registration. The Authority considered that nothing in the documents relating to the court proceedings prevented it from making its decision.
On 13 November 2014, Mr Kraues was granted leave to file a Notice of Discontinuance in the Federal Circuit Court.
The Authority’s decision
By subsection s 303(1) of the Act, the Authority may cancel or suspend an agent’s registration, or caution him or her, if it becomes satisfied that:
(d)the agent's application for registration was known by the agent to be false or misleading in a material particular; or
(e)the agent becomes bankrupt; or
(f)the agent is not a person of integrity or is otherwise not a fit and proper person to give immigration assistance; or
(g)an individual related by employment to the agent is not a person of integrity; or
(h)the agent has not complied with the Code of Conduct prescribed under section 314.
The Code of Conduct is prescribed in schedule 2, in accordance with regulation 8 of the Migration Agents Regulations 1998.
On 24 October 2014, the Authority determined that Mr Kraues had engaged in conduct in breach of his obligations under clauses 2.1, 2.23, 5.1, 5.5, 7.1, 7.2, 7.4 and 7.5 of the Code of Conduct, and was not a person of integrity or otherwise not a fit and proper person to give immigration assistance within the meaning of s 303(1)(f) of the Act, and cancelled his registration.
In a 25-page decision, the Authority detailed the allegations against Mr Kraues and its reasons for finding that he had:
·failed to act in the legitimate interests of clients;
·failed to manage client monies in accordance with his financial obligations;
·failed to issue receipts and financial statements of accounts;
·failed to keep proper financial records; and
·his conduct had not maintained the reputation and integrity of the migration agent profession.
In particular, the Authority was satisfied that Mr Kraues:
·made withdrawals from the clients’ account without providing any related services or making appropriate disbursements;
·did not issue statements of services for the withdrawals that he made; and
·had inappropriately used withdrawn funds for his own purposes.
The Code of Conduct
The Code of Conduct is “intended to regulate the conduct of registered migration agents”: cl 1.1. It imposes on a registered agent “the overriding duty to act at all times in the lawful interests of the agent’s client”. Any conduct “falling short of that standard” renders an agent liable to cancellation of registration: cl 1.12.
Part 2 concerns standards of professional conduct. Relevant to this decision, an agent must:
·always act according to law and the legitimate interests of his or her client, and deal with the client competently, diligently and fairly: cl 2.1; and
·take all reasonable steps to maintain the reputation and integrity of the migration advice profession: cl 2.23.
Part 5 concerns fees and charges. Relevant to this decision, an agent must:
·set and charge a fee that is reasonable in the circumstances of the case: cl 5.1; and
·be aware of the effect of s 313 of the Act, by which an agent is not entitled to be paid a fee or other reward for immigration assistance unless a statement of services is given to the person, and that statement must be consistent with the Agreement for Services and Fees which the agent must give the client: cl 5.5.
Part 7 concerns financial duties. Relevant to this decision, an agent must:
·keep separate accounts with the financial institution for his or her operating expenses and monies paid by clients for fees and disbursements: cl 7.1;
·hold in the clients’ account money paid for an agreed block of work until that work has been completed, and an invoice has been issued showing each service performed and the relevant fee: cl 7.2;
·keep detailed records of the clients’ account including the date and amount of each withdrawal made in relation to an individual client and the name of each recipient of the money that was withdrawn: cl 7.4; and
·make available for inspection by the Authority, records of the clients’ account and each account into which money paid by a client to the agent for fees and disbursements has been deposited: cl 7.5.
The application for review
In an application for review lodged with the Tribunal on 5 November 2014, Mr Joel, who represents Mr Kraues, asserted that “the conduct of the Authority involved amongst others”:
1Jurisdictional Error when the Authority decided to exercise its powers to “investigate all actions by a registered migration agent connected to (or in anticipation of) the provision of immigration assistance”, as the scheme for registration and regulation of migration agents is restricted to the provision of immigration assistance not conduct preparatory to or in anticipation of ‘immigration is assistance’, as defined.
2Improper Exercise of Power when the Authority imposed a legal duty on the agent, in purporting to require the agent, by notice to make a statutory declaration in answers to questions in writing, where the conduct of the agent did not relate to the giving of ‘immigration assistance’, as defined.
3Procedural Unfairness when the Authority decided to re-classify the agents written retainer agreement, as a fee for service agreement, to bring the complaint matter within its jurisdiction, following an internal review by the Authority, of the Authorities (sic) original determination, that it has ‘no jurisdiction’ in the complaint matter, as the complaint did not relate to the provision of ‘immigration assistance’, as defined.
After several preliminary conferences, Mr Kraues’ application was listed for hearing on 26 and 27 November 2015. On 11 November 2015, Mr Joel sought an adjournment on the ground of “totally new evidence” provided by the Authority which “utterly changes” the case.
At a directions hearing on 18 November 2015 to consider the request for an adjournment, Mr Joel submitted that written statements by witnesses to be called by the Authority included matters not previously raised. He further asserted that, absent the provision of immigration assistance by Mr Kraues, the Code of Conduct could not apply and the Tribunal had no jurisdiction to determine the application for review.
Considering that it was Mr Kraues who sought the review, the assertion that the Tribunal had no jurisdiction to determine his application made little apparent sense. However, the matter was listed for preliminary argument on 26 February 2016 and parties were directed to file written submissions.
The Tribunal’s jurisdiction to review the Authority’s decision
In written and oral submissions, Mr Joel asserted that the “central issue” in these proceedings is whether the Tribunal can “make a new decision in circumstances not allegedly authorised by the [Migration] Act”. He submitted that the Act “does not authorise the [Authority] to make a decision in terms undertaken so as to enliven the application of Section 303”, and the Tribunal cannot deal with the matter because Mr Kraues did not provide immigration assistance and the necessary “nexus” between his conduct and the power of the Authority (and so the Tribunal) is not established. Mr Joel sought a declaration as to be “invalidity of the power of the Tribunal to review the Authority’s decision”.
As I understand them, Mr Joel’s submissions were that the Authority’s power to cancel Mr Kraues’ registration relied on a finding that he provided immigration assistance within the meaning of s 276 of the Act and that, because he did not provide immigration assistance, the Authority had no power to cancel his registration.
Similar submissions were made by Mr Joel and rejected by the Tribunal in Issa and Migration Agents Registration Authority [2015] AATA 451. I reject them now for the same reasons.
The submission concerning jurisdiction amounts to saying that s 303 of the Act and the Code of Conduct cannot operate unless immigration assistance has been provided. In effect, that would allow a migration agent to avoid the power given to the Authority (and so the Tribunal) by failing to do the very thing he or she was engaged to do. As I understand it, that is precisely what Mr Kraues seeks to do.
The Authority has broad power to regulate the conduct of migration agents. By s 316 of the Act, its functions include:
·to monitor the conduct of registered migration agents in their provision of immigration assistance and of lawyers in their provision of immigration legal assistance;
·to investigate complaints in relation to the provision of immigration assistance by registered migration agents;
·to take appropriate disciplinary action against registered migration agents or former registered migration agents; and
·to investigate complaints about lawyers in relation to their provision of immigration legal assistance, for the purpose of referring appropriate cases to professional associations for possible disciplinary action.
By s 317, the Authority has a broad power to “do all things necessarily or conveniently done for, or in connection with, the performance of its functions”.
The Authority has power to investigate complaints in relation to the provision of immigration assistance by registered migration agents. It does not rely on the actual provision of immigration assistance. The complaint may be – as it was here – that the agent failed to provide that assistance.
Nor does a finding that an agent has breached his or her obligations under the Code of Conduct rely on the provision of immigration assistance.
Even if Mr Joel’s argument in respect of the Authority’s power were to be accepted, it would not follow that the Tribunal could not review its decision. The Tribunal has jurisdiction to review a decision notwithstanding it was void or voidable: Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd [1979] FCA 21; (1979) 24 ALR 307 (Lawlor); and see Zubair and Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 248 at [28]-[29] which adopts the “approach” taken in Lawlor.
Mr Kraues disagrees with the Authority’s decision. He is entitled to seek review by the Tribunal. He has done so. It is, without doubt, a decision reviewable by the Tribunal. If the Tribunal concludes that the Authority had no jurisdiction to make that decision, it can set it aside in accordance with subsection 43(1) of the Administrative Appeals Tribunal Act 1975 (AAT Act).
As for a declaration, Mr Joel apparently seeks to have the Authority’s decision overturned not by merits review but by a declaration of invalidity which the Tribunal has no power to make. It has only the powers conferred by statute. It has no power to make declarations and, in particular, no power to make the declaration sought.
In any event, whether or not Mr Kraues provided immigration assistance to the complainants is not itself the question before the Tribunal, although, plainly, it is relevant. The question is whether his registration should be cancelled (or suspended or a caution given) because he “not a person of integrity or is otherwise not a fit and proper person to give immigration assistance” or has not complied with the Code of Conduct: s 303(1).
At the conclusion of the preliminary hearing, I gave reasons orally as set out here for my decision that the Tribunal has jurisdiction to review the decision to cancel Mr Kraues’ registration. An order to that effect was issued by the Tribunal on 26 February 2016. Written reasons for this decision were not requested although it was open to the parties to do so in accordance with s 28 of the AAT Act.
For reasons which are not clear, Mr Joel appears to have misunderstood what occurred at the preliminary hearing. At the substantive hearing on 27 April 2016, he said he understood the question of jurisdiction was still “open for argument” and he “reserved the right” to agitate that question before the Tribunal again. Having already heard argument and reached a decision, and there being no reason that I could see why that decision should change, I declined to hear further argument on this point.
Has Mr Kraues been denied procedural fairness?
Mr Joel maintains that Mr Kraues has been denied procedural fairness in these proceedings. He contends that Mr Kraues has been placed in an “impossible position” by the “failure of the Authority to provide any particulars of the case against him and the evidence on which it seeks to rely”. Further, that a “presumptive” onus of proof lies on the Authority that cannot be shifted onto Mr Kraues by requiring him to give evidence, or by drawing any adverse inference from his failure to do so.
I reject both submissions. As the documents outlined above show, the nature of the complaint which triggered the Authority’s investigation, the information relied upon by the Authority and the ways in which the Authority considered Mr Kraues’ conduct was wanting, were made abundantly clear. It is reasonably clear from correspondence between the Authority and Mr Kraues, including his response to the second s 308 notice, that he was aware of the nature of the complaint but denied it had any basis.
In these proceedings the Authority’s representatives have filed documents in accordance with s 37 of the AAT Act as well as statements of issues, facts and contentions. On various dates in November 2015, the Authority filed statements from Mr Karu and from Mr Jefferson McKenzie, Recruitment Manager for the construction company on whose behalf the complainants worked, and an affidavit from Mr Mark Siegel, General Manager of the Western Australian operations of Corestaff Pty Ltd.
Mr Kraues disputes much of what is said against him but he could not be reasonably under any misapprehension as to the nature of the allegations against him, the information on which the Authority relied in cancelling his registration, or the information now before the Tribunal.
Onus of proof
It well settled that, absent provision in the relevant legislation, neither party in administrative proceedings carries an onus of proof: McDonald v Director-General of Social Security [1984] FCA 57; 1 FCR 354. Woodward J said at [358]:
It is true that facts may be peculiarly within the knowledge of a party to an issue, and a failure by that party to produce evidence as to those facts may lead to an unfavourable inference being drawn – but it is not helpful to categorise this common-sense approach to evidence as an example of an evidential onus of proof. The same may be said of the case where a good deal of evidence pointing in one direction is before the Tribunal, and any intelligent observer could see that unless contrary material comes to light that is the way the decision is likely to go.
Reference is sometimes made to “a practical onus” (see Brackenreg v Comcare (2010) 187 FCR 209 referred to in Comcare v Power [2015] FCA 1502 (Power)). That expression is “apt to mislead”: Katzmann J in Power at para [57]. As Her Honour observed in Power at para [70] it means no more than:
[It] is reasonable to say, as a practical matter, that Comcare would have to persuade the Tribunal of the circumstances which justify a finding that compensation payments should no longer be made. The statement the Tribunal made in the present case that Comcare did not discharge its onus should be taken to mean that the Tribunal was not persuaded that Ms Power was no longer suffering from the effects of the compensable injury.
Neither party is required to “prove” its case. Mr Kraues has not provided written or oral evidence in these proceedings. He was invited several times to do so, but did not. He did not provide any explanation and none was sought. He is not required to give evidence. However, where an applicant chooses not to offer any evidence, the Tribunal must determine, on the information before it, the whether it is satisfied there are grounds for cancelling his or her registration. In this case, the Tribunal has only the information provided, and the evidence called, by the Authority on which to make a decision.
Information before the Tribunal
In addition to documents provided by the Authority in accordance with s 37 of the AAT Act and the written witness statements, the Tribunal has received extensive written submissions from both parties.
Corestaff produced under summons 67 documents signed by employees authorising an initial deduction of $825, and weekly deductions of $82.50, to be paid to the Kraues Law Trust Account. I have no reason to doubt that each was signed by the employee whose name appears on it. The authorisation was “to remain in force until cancelled by Kraues Pty Ltd t/a Kraues Law in accordance with the terms described in the [Retainer Agreement]”.
Statements for the Kraues Law bank account into which deductions from the complainants’ salaries were paid were produced to the Tribunal under summons.
The Tribunal heard oral evidence from:
·Mark Karu, the complainant;
·Jefferson McKenzie, Recruitment Manager for Construction and Mining Contractor NRW Pty Ltd which was the miners’ ultimate employer in Australia;
·Daniel Ushorof, International Recruitment Consultant for Corestaff from 2011 to September 2012; and
·Mark Siegel, General Manager of the Western Australian operations of Corestaff.
Mr Kraues’ contentions
As I understand them, Mr Kraues’ contentions are, essentially, that:
·he played no part in the agreement between the complainants and Corestaff;
·he was not aware of the retainer agreement signed by the complainants and was “totally ignorant at the relevant times of the meaning ascribed to the Agreement” by the complainants;
·he “fairly ascribed an entirely different meaning to the retainer”; and
·he did not provide immigration assistance; he was paid a retainer.
The “Retainer Agreement”
The “Retainer Agreement” shows, in part:
1AGREEMENT AND FEE TYPE
(a)Retainer Agreement – Single Sum Fixed Fee.
(b)Immigration Assistance – Hourly Fee calculated in accordance with the fee rate published in the table below.
2TERMS AND FEE CONFIRMATION
(c)Retainer Agreement to be available to provide immigration assistance.
(d)Single Sum Fixed Fee: $7260 including 10% GST (where applicable).
(e)This Retainer Agreement expires twenty (24) (sic) months after the primary applicants 457 visa grant date.
(f)DIAC Visa Application Charges to be advised at time of lodgement.
3PAYMENT METHOD AND STRUCTURE
Payment is to be made in the following instalments:
Payment Method: Salary Deduction
Frequency Period: Weekly: Fixed Date
Total Number of Instalments: (79)
Date of First Instalment: 01/05/2012
Initial Instalment: $825
Weekly Instalments: $82.50
Deduction Details:
Deducted from Corestaff Salary and transferred to:
Name: Kraues Law Client Trust Account
BSB: [Deleted]
Account Number: [Deleted]
Bank: [Deleted]
PAYMENT DUE DATE
BLOCK OF WORK TO WHICH PAYMENT RELATES FOR THE RETAINER AGREEMENT SINGLE SUM FIXED FEE OF $7,260 $7,260 01/05/2012 Commencement of Retainer Agreement; the retainer makes available the services of Kraues Law to provide immigration assistance. Upon Invoice Immigration Assistance Hourly Fees: Specialist Administrative Support related to a visa application two hundred and twenty five dollars; Professional Migration Law and Regulations four hundred and fifty dollars; Any other work that does not require professional or specialist migration law and procedural knowledge eighty five dollars. Upon Invoice Any Disbursement Upon Invoice All Government Charges
(g)(i) The Agent will hold all non-retainer agreement fees paid in advance in the clients’ trust account (ii) After the Agent has completed each block of work and issued an invoice which sets out the particulars and charge made of each service preformed the Agent will be entitled to withdraw the fees relating to that block from the clients’ trust account.
(h)(i) The agent’s professional fees may be invoiced on behalf of the agent by an agent nominated by the entity. (ii) The agent may assign the agreement and its benefits in full or in part to an unrelated third party who upon assignment shall be the lawful and beneficial owner of the agreement with authorisation to invoice and collect any monies. (iii) The responsible agent, other migration agents and administrative staff may work on a client matter from time to time. (iv)The clients last known email address is the primary contact point for all communications.
A complete copy of the document signed by Mr Karu on 1 May 2012 is annexed to this decision.
The final paragraph requires “the client” to “provide a personal guarantee to pay the retainer agreement fee and other charges in full and without offset on the due date”. In other words, it purported to bind the miners each to pay Mr Kraues $7,260 for nothing more than “being available”. Actual advice and assistance would be for an additional fee.
Despite the fact that the “retainer fee” was paid into Kraues Law’s Client Trust Account, nothing in the agreement requires Mr Kraues to account for that money in any way. The only reference to any form of accountability is to “non-retainer agreement fees paid in advance” which were to be held in the trust account and could be withdrawn by Mr Kraues on completion of “each block of work” and issuing of an invoice.
Recruitment of the miners and the retainer agreements
It is common ground that Mr Siegel and Mr McKenzie travelled to Papua New Guinea to interview the miners for possible employment by their client. Mr Ushorof accompanied them to provide administrative assistance such as ensuring interviewees had all the necessary paperwork; he did not take part in the interviews.
Mr McKenzie’s evidence
Mr McKenzie gave evidence that he and Mr Siegel conducted the interviews in Papua New Guinea. They each asked questions of prospective employees. Mr McKenzie told the Tribunal that he would ask whether they were looking at working in Australia only for the length of the subclass 457 visa or, if eligible, whether they would want to apply for permanent residency. He asked this so he could make a notation as to who would be best suited for further training and “upskilling”. He disputed Mr Ushorof’s claim that Mr Siegel indicated that Corestaff would support of their applications for permanent residency. He played no other part in the arrangement between the miners and Mr Kraues.
Mr Ushorof’s evidence
Mr Ushorof gave evidence that, while in Papua New Guinea, Mr Siegel told the miners “on a number of occasions” they would have the opportunity of applying for permanent residency in Australia. Mr Ushorof said he formed the view they would not have come to Australia without the prospect of obtaining permanent residency. He claimed Mr Siegel made similar statements after the miners arrived in Australia. Although I had difficulty with some aspects of Mr Ushorof’s evidence, I think it more probable than not that, even if Mr Siegel did not tell the miners directly that they would be able to apply for permanent residency, he said enough for them to believe they would have that opportunity.
Mr Siegel’s evidence
Mr Siegel disputed Mr Ushorof’s account. He said Corestaff engaged Mr Kraues to obtain subclass 457 visas for the workers but that, when they asked in Papua New Guinea about their prospects for permanent residency, they were told that Corestaff were not migration agents but they would be given a “welcome pack” on arrival in Australia with relevant information and contact details for the Department. Mr Siegel maintained that, when the miners raised the question again on arrival in Australia, Corestaff reiterated they could not give financial or immigration advice and referred them to the information in their “welcome packs”.
Mr Siegel maintained that Corestaff “did not directly introduce” Mr Kraues to the miners but provided them with his “contact information” along with a list of other migration agents in Western Australia. Mr Siegel’s evidence was, in my view, somewhat disingenuous in that Corestaff made a meeting room available for Mr Kraues’ use when he was in Perth because he did not have his own office there, and each miner’s “welcome pack” contained a copy of the retainer agreement complete with Mr Kraues’ bank account details and the name of each miner filled in, ready for the miner’s signature.
Mr Siegel gave evidence that Mr Kraues “entered into arrangements” with some of the Papua New Guinea employees “in relation to their obtaining of permanent residency” and Mr Kraues asked if Corestaff would be prepared to make deductions from their pay for the migration work he would be doing for them. Corestaff “agreed to facilitate this” for Mr Kraues as long as the employees agreed to sign the necessary authorisation. Mr Kraues prepared the agreement and met with the individuals in the meeting room provided for him by Corestaff.
Mr Siegel gave evidence that some of the miners asked him whether they were “doing the right thing” engaging Mr Kraues and his response was always that Corestaff was not a migration agent and he could not give advice other than to say that, personally, he would “shop around for the best price”. Again, I found Mr Siegel’s evidence about this somewhat disingenuous, given the relationship between Corestaff and Mr Kraues.
It is apparent that Corestaff was not at arms’ length as Mr Siegel suggested, and they had an arrangement dating back to well before Mr Karu was engaged. By email dated 31 October 2011 to Mr Siegel, Mr Kraues attached “new agreement and deduction” forms and said:
… once I (sic) receive the currently signed pfd agreements i (sic) will delete and replace each one hopefully we can get this done today. txs k (sic)
Mr Siegel has produced copies of emails from Patrick Levo, another employee, to Mr Kraues. By email dated 12 July 2012, Mr Levo advised Mr Kraues he had to return to Papua New Guinea for personal reasons, he had spoken to Mr Siegel about refunding his “PR deductions”, and he asked Mr Kraues for the refund. For some reason, the email was sent to another of Mr Kraues’ email addresses. He responded asking Mr Levo to direct his request “to Kraues Law only” and, on receipt, he would call Mr Levo. Repeated emails from Mr Levo throughout July to August 2012 went unanswered. On 14 August 2012, Mr Siegel emailed Mr Levo to say he was “seeing Kurt today and will remind him of your emails for you”.
Mr Siegel gave evidence that, “at some point”, the employees began complaining they were unable to contact Mr Kraues in relation to the work he was doing for them and he was not returning phone calls; they asked if Corestaff could reach him but Corestaff advised it was a private matter between them and Mr Kraues. However, Mr Siegel said, during a phone call, he advised Mr Kraues that a large number of complaints were being received to which Mr Kraues’ response was that he had left messages for everyone and that “perhaps the parties kept missing each other”.
Eventually, according to Mr Siegel, the complaints increased and it became apparent that Mr Kraues was not doing any actual work for the employees. As a result, Mr Siegel met with them and “strongly suggested” they contact the Authority and “lodge a class-action complaint” against Mr Kraues.
Mr Karu’s evidence
Mr Karu gave evidence that he arrived in Perth on 7 May 2012 and went to Corestaff’s office the following day to complete the necessary paperwork for his employment. When there, he “was told” about an arrangement Corestaff had with Mr Kraues under which an initial payment of $825 would be made to Mr Kraues from his salary followed by weekly deductions of $82.50. Mr Karu gave evidence that, based on what he was told by Corestaff, he understood the payments were for Mr Kraues’ assistance with his and others’ permanent residency applications. They were given forms with their names filled in and they signed. As far as he could recall, they did not meet Mr Kraues until after their employment was terminated.
Mr Karu gave evidence that, when their employment was terminated, he and a group of other miners contacted Mr Kraues. At a meeting in Perth, they made clear they wanted their money back but he refused. Shortly after this meeting, the miners who had been at the meeting formulated the complaint and signed it. Three others who were not at the meeting subsequently also signed up.
I accept Mr Karu’s evidence that he and the other miners understood the deductions were for the purpose of assistance by Mr Kraues with their permanent residency applications. I accept he and others would not have agreed to deductions of substantial amounts for nothing more than a “retainer”. I accept his evidence that the miners asked Mr Kraues to return their money after their employment was terminated and that he refused to do so.
Whatever was said during the interviews or on their miners’ arrival in Australia, and whatever role Corestaff played in facilitating the agreements between Mr Kraues and their employees, it is not in dispute that:
·deductions were made from the miners’ pay and deposited into Kraues Law’s account;
·Mr Kraues did not provide immigration assistance or any other service in return for the money;
·Mr Kraues has withdrawn money from the account; and
·Mr Kraues has not returned any money to the miners and he has not accounted to them for the withdrawals.
Payroll and bank records
Information provided by Corestaff shows that a total of $203,397.50 was deducted from 66 miners’ salaries by Corestaff and paid into the Kraues Law Client Trust Account. Corestaff has also provided copies of statements of the bank account from which payroll deductions for the “Kraues retainer” were paid from 15 November 2011 to 31 October 2012.
Mr Joel, for the Applicant, submits that this information is “utterly erroneous and deceptive” and the Tribunal should disregard it for reasons including that it “cannot establish payment for immigration assistance in any form” and it is no basis for the Authority’s “claim that the Miners’ (sic) may assert ownership of the transmitted funds”. Mr Joel further submitted that the “previous owner of the funds” was Corestaff Admin Pty Ltd “who has not made any objection to the nature of the withdrawal”.
I reject those submissions. Mr Kraues has acknowledged having received those payments and having withdrawn money from the account. He has acknowledged that he did not account to the miners for those withdrawals. He does not suggest that he provided any service in return other than “being available” to assist the miners. Indeed, that is the heart of his argument as I understand it: that the agreement obliged him to do nothing more than “be available”.
The “contractual relationship”
The Retainer Agreement refers to the “contractual relationship” between “the client and Kraues Pty Ltd t/s Kraues Law”. Mr Joel has asserted throughout these proceedings that the Tribunal has no jurisdiction to determine matters arising out of a contract. That argument amounts to saying only that disputes arising from a contractual arrangement are for the courts to decide.
The Tribunal cannot, and does not purport to, determine matters of contract. Whether the complainants pursue recovery of their monies through the courts is a matter for them. It is another matter whether Mr Kraues’ conduct in relation to the contractual relationship puts him in breach of the Code of Conduct or makes him unfit to give immigration assistance. Nothing about the existence of a contractual relationship prevents the Tribunal from reviewing the decision made by the Authority.
Mr Karu’s “authority” to make the complaint
Mr Joel submitted that the Tribunal cannot be satisfied that Mr Karu had the authority of the other complainants to make his complaint to the Authority. In particular, he submitted that the Tribunal cannot be satisfied that signatures purporting to be theirs in fact belong to the other complainants. Further, that Mr Karu indicated on the complaints form that he was not “…making this complaint on behalf of another person (e.g. relative)”.
It has to be said that there seemed to be an element of clutching at straws about some of the arguments, including this one, advanced on behalf of Mr Kraues. Mr Karu gave oral evidence, which I accept, that he indicated “No” to that question because he understood it to be asking him whether he was making the complaint on behalf of a relative. In answer to a question on the complaint form, “How much money did you pay the agent?”, he wrote “Approx $200,000.00”, being the total amount paid by the complainants.
Whether or not Mr Karu had the authority of the other complainants is not relevant for present purposes. A complaint is merely a means by which an investigation by the Authority may be triggered. There may be questions as to whether a migration agent’s conduct failed in respect of particular complainants but that goes essentially to the extent of failings; a single complaint would be sufficient.
Consideration
For the following reasons, I am satisfied on the information before me that Mr Kraues is not a fit and proper person to give immigration assistance and that he has not complied with the Code of Conduct.
I have only had the benefit of hearing from Mr Karu who formulated the complaint against Mr Kraues, but I am satisfied that the arrangement for payroll deductions and payment to the Kraues Law Client Trust Account went well beyond Mr Karu. He gave evidence that he witnessed the signatures of the other miners who complained with him. I accept his evidence. I am satisfied that the other complainants had the same dealings with Mr Kraues. Copies of the “Retainer Agreements” signed by them and of Mr Kraues’ letters to them after they were terminated are before the Tribunal together with documents showing payroll deductions and payments to Kraues Law Client Trust Account. The evidence also shows that, more probably than not, the arrangement extended well beyond the complainants, to up to 70 miners in all.
I am satisfied that Mr Karu and the miners who complained with him understood they were paying money to Mr Kraues in relation to their permanent residency applications. I think it probable that statements were made during the interview process that suggested that assistance would be available to help with permanent residency applications. Indeed, it was a matter of some interest to Mr McKenzie so that he could plan for future training and “upskilling” of the employees. Mr Kraues can have been in little doubt that is what the miners thought they would receive in return for substantial ongoing payments. It is improbable that they would have paid those amounts for nothing more than his “availability”.
I accept Mr Karu’s evidence that he did not meet Mr Kraues until his employment was terminated, several months after he arrived in Australia. There is no evidence that Mr Kraues took any steps to explain to the miners the nature of the agreement they were signing, to contact them at any point to ask whether they required his services. Mr Levo’s repeated plaintiff emails demonstrate Mr Kraues’ failure to respond. I accept that, when the miners contacted him after their employment was terminated, he initially failed to respond but then met with them and, when he did, that his response was wholly unsatisfactory.
Mr Kraues cannot, in effect, hide behind his failure to provide any service, or to account to the miners for money withdrawn from the trust account, simply because the arrangement is stated to be a “retainer agreement”. It is true that a close reading of the document shows that the fee of $7,260 was for “being available”, and that “immigration assistance” would incur an additional fee. However, it is difficult to see how $7,260 for nothing more than “being available” can be said to be “a fee that is reasonable in the circumstances”, especially when payment is required even after the miners could no longer make use of his services. As the Authority has pointed out, had the agreements for all of the 81 miners involved run their course, they would have paid Mr Kraues in total $588,060 without him providing any service.
The Code of Conduct imposes on registered migration agents an overriding duty always to act in their clients’ legitimate interests, and to deal with them competently, diligently and fairly. As set out above, I am satisfied that the miners understood they were paying Mr Kraues for assistance with their permanent residency applications, and that he failed either to provide that advice or to explain the nature of the agreement they had signed. I am satisfied that, in this way, he failed to act in their legitimate interests, and he failed to deal with them fairly. Moreover, by his own admission, he has withdrawn money paid to him without accounting for it.
I am satisfied that Mr Krause failed to comply with clause 2.1 of the Code of Conduct. I am also satisfied that conduct of this sort brings the migration advice profession into disrepute and that, by his conduct, Mr Kraues failed to take all reasonable steps to maintain the reputation and integrity of the profession, and so breached his obligations under clause 2.23 of the Code of Conduct.
Mr Kraues’ written response to the second notice confirmed that withdrawals had been made from the monies paid by the miners into the client account. He maintains that withdrawals were made in accordance with the agreement. However, even if the monies were retainer fees only, he has failed to account for any withdrawals. The extent of any accounting to the miners were the letters Mr Kraues sent to them on 11 December 2012 which did no more than set out the balance owing under the agreement.
I am satisfied that Mr Kraues has failed to provide a statement of services to the miners and failed to account for withdrawals from the client account. In so doing, I am satisfied that his conduct breached clauses 5.1 and 5.5 of the Code of Conduct.
I am also satisfied that Mr Kraues’ failure to issue receipts to the miners for the payments they made, to issue a final statement of services to those whose employment was terminated, and his apparent failure to keep records of the clients’ account amounted to breaches of his obligations under clauses 7.1, 7.2, 7.4 and 7.5 at the Code of Conduct.
Merely because an agent fails to comply with one or more provisions in the Code of Conduct, it does not follow that he or she is not a person of integrity or is otherwise not a fit and proper person to give immigration assistance. Whether a person is a “fit and proper person to give immigration assistance” requires an assessment of his or her honesty, knowledge and competency. In Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, Justices Toohey and Gaudron said:
[d]epending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur. The list is not exhaustive but it does indicate that, in certain contexts, character (because it provides indication of likely future conduct) or reputation (because it provides indication of public perception as to likely future conduct) may be sufficient to ground a finding that a person is not fit and proper to undertake the activities in question.
I am satisfied, on the information before me, that Mr Kraues is not a fit and proper person to give immigration assistance. In his dealings with Mr Karu and others, he has failed to act in the legitimate interests of his clients. He has demonstrated an apparent disregard for the professional ethics and conduct and the regulatory framework by which registered migration agent operate, and he had engaged in conduct contrary to the Code of Conduct in his dealings with the complainants in this matter and in the management of their monies. The nature and extent of his failure to comply with the Code of Conduct makes him, in my view, not a person of integrity and not a fit and proper person to give immigration assistance.
Conclusion
For these reasons, I affirm the decision under review.
I certify that the preceding 106 (one hundred and six) paragraphs are a true copy of the reasons for the decision herein of Senior Member J F Toohey
...........................[sgd].............................................
Associate
Dated: 23 December 2016
Date(s) of hearing: 27 & 28 April 2016; 17 August 2016 Date final submissions received: 10 October 2016 Solicitors for the Applicant: Adrian Joel & Co Solicitors for the Respondent: DLA Piper Australia ANNEXURE 1:
NOTE: Signature and bank account details deleted.
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