Master Mans Noodle Qld Pty Ltd (Migration)

[2023] AATA 1157

Master Mans Noodle Qld Pty Ltd (Migration) [2023] AATA 1157 (6 April 2023)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Master Mans Noodle Qld Pty Ltd

REPRESENTATIVE:  Mr Ton Chau, Solicitor, Condor Migration

CASE NUMBER:  2109349

HOME AFFAIRS REFERENCE(S):          OPF2020/14277

MEMBER:Andrew McLean Williams

DATE:6 April 2023

PLACE OF DECISION:  Brisbane

DECISION:The Tribunal sets aside the decision under review and substitutes a decision finding as follows:

·     the Applicant has breached regulations 2.79(3)(iii) and 2.89(2);

·     has not breached either regulation 2.86, or regulation 2.90; and

·     now imposes a sponsorship bar for a period of 12 months, commencing from 7 July 2021.

Statement made on 06 April 2023 at 12:37pm

CATCHWORDS
MIGRATION – cancellation – sponsorship cancellation – 3 years bar – employee works predominantly in their specified role – an underpayment to Shelly Wang – Mastermans have not provided the Department with false or misleading information – Mastermans should be barred from making future applications for approval as a work sponsor for a specified period of twelve (12) months–– decision under review set aside

LEGISLATION
Migration Act 1958, s 140M
Migration Regulations 1994, rr 2.79, 2.86, 2.89, 2.90

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1.This is an application for review of a decision made by a Delegate of the Minister for Home Affairs to take an action under s.140M of the Migration Act 1958 (Cth) (‘the Act’) in relation to the applicant’s sponsorship.

1. The Applicant, Master Mans Noodle Qld Pty Ltd (‘Mastermans’), was approved as a standard business sponsor on 21 December 2018, for a period of five years.

2. On 7 July 2021, a Delegate of the Minister decided to cancel Mastermans’ approval as a standard business sponsor and to bar Mastermans for a further period of three (3) years from making further applications for approval as a standard business sponsor or temporary activities sponsor under s.140M(1) of the Act, on the basis that Mastermans had failed to satisfy sponsorship obligations arising under Regulation 2.79 (Obligation to ensure equivalent terms and conditions of employment); Regulation 2.86 (Obligation to ensure primary sponsored person works or participates in the nominated occupation, program or activity); and Regulation 2.90 (Provision of false or misleading information). The claimed breaches relate to Mastermans’ employment of Ms Shelly Wang Chang Yu (‘Shelly Wang’).

3. The Applicant company, as represented by Mr Jason Kien Khong Ha (‘Mr Ha’), appeared before the Tribunal on 28 March 2023 to give evidence and make submissions. The Tribunal also received oral evidence from its sponsored employee Ms Shelly Wang.

4. The Applicant was represented in relation to these review proceedings by its solicitor, Mr Ton Chau of Condor Migration. Mr Chau also attended the Tribunal hearing on 28 March 2023 and had provided detailed written submissions to the Tribunal, prior to the hearing.  These were then supplemented, by further written submissions filed in the Tribunal on 3 April 2023, at the invitation of the Tribunal.

   6.For the following reasons, the Tribunal has decided to set aside the decision under review and to now make a fresh decision, in substitution for that previously made by the Delegate.

   CONSIDERATION OF CLAIMS AND EVIDENCE

5. Sections 140K, 140L and 140M of the Act provide for the imposition of sanctions on approved sponsors in prescribed circumstances.

6. 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.

7. For these purposes, the circumstances are prescribed in regulations 2.89–2.94B 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 are 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.

8. 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: regulations 2.89–2.94B. These criteria, as they relevantly apply to the circumstances of this case, are now set out in the attachment to this decision.

   Does a circumstance for the taking of an action exist?

   11.Mastermans operates as a noodle manufacturer from factory/warehouse complex in Geebung, Brisbane.  This is a new facility.  Prior to July 2022 Mastermans had operated the same business, yet from far smaller premises situated at Virginia, also in Brisbane.  The former operation at Virginia had been commenced by the previous owner, Mr Wong. 

   12.The current owners and operators of Mastermans commenced in April 2016 as a family-run business, with the owners having come from Malaysia. The former owner Mr Wong is a relative.

   13.Shelly Wang had come to Australia on a student visa, and has completed post-graduate studies at Griffith University, before commencing her employment at Mastermans, in the middle of 2016.  Shelly Wang was subsequently promoted into her current position as Supply and Distribution Manager in March, 2017.

   14.In September 2017, Mastermans submitted a standard business sponsorship and subclass 457 visa nomination application on behalf Shelly Wang.  These were approved by the Department, on 21 December 2018.  The sponsorship application was supported, inter alia by an employment contract (styled ‘letter of engagement’) dated 22 February 2017 in which Shelly Wang was offered the position of Distribution Manager on a total remuneration package of $71,339.25.  The letter of engagement included a position description listing the range and scope of the duties to be performed by the Distribution Manager.  Shelly Wang signed (and thus formally accepted) the letter of engagement on 28 February 2017.

   15.In November 2020, Australian Border Force (‘Border Force’) commenced monitoring Mastermans’ compliance with its sponsorship obligations.  This included a site visit to the former premises at Virginia, and site interviews, on 2 December 2020, as well as a requirement to produce specified documents and records, made pursuant to regulation 2.83.

   16.On 24 February 2021, Border Force wrote to Mastermans giving notice of an intention to take action (‘NOITTA’), in which it was indicated that Border Force was now considering taking action under s.140M, on the grounds particularised in the NOITTA, and inviting a written response to the matters set out in the NOITTA and any evidence in support, to be provided to Border Force by Mastermans by no later than 10 March 2021.

   17.In broad summary, the NOITTA specified the following as the basis for Border Force considering cancellation of sponsorship approval under s.140M:

   ·Regulation 2,79 requires that Standard Business Sponsors are to ensure that sponsored persons are provided with terms and conditions of employment that are no less favourable than those that would be provided to equivalent employees who are either Australian citizens, or Australian permanent residents.  Shelly Wang had been nominated for sponsorship under the Subclass 457 visa program on an annual salary of $71,339.25, and this had been approved as a condition of her sponsorship, yet documents provided by Mastermans, and analysis of those documents by Border Force revealed that Shelly Wang was only being paid $54,579.20 per annum, and therefore was being underpaid.

   ·Regulation 2.86 requires that Standard Business Sponsors must ensure that sponsored persons work primarily in their nominated role.  The role that had been nominated for Shelly Wang was that of ‘Distribution Manager’.  Tasks for that role were specified in the letter of engagement signed by Shelly Wang on 28 February 2017, and these accord with the usual tasks for the occupation of Supply and Distribution Manager in the ANZSCO (Unit Group 1336).  Yet, during the Border Force site visit, Shelly Wang had informed the attending officers that her job included, inter alia, “helping in the factory”, such that the view had been formed that her day-to-day role was far less skilled and much less important than was the role that had been nominated (and approved) for her sponsorship.

   ·Regulation 2.90 provides that a Standard Business Sponsor must not provide false or misleading information.  In response to the notice to produce documents issued by Border Force pursuant to regulation 2.83, Mastermans had produced various documents, on 24 December 2020.  These included two sets of pay records (‘old system’ and ‘MYOB’) showing Changyu (Shelly) Wang being paid an inconsistent gross salary under the two pay systems.  Payslips for the period 15 April 2019 to13 December 2020 show Ms Wang receiving a net salary of $1,060.90 per week; yet bank deposit records for that same period reveal her net pay receipts to have been only $849.08, per week.

   18.On 10 March 2021 Condor Migration wrote to Border Force and provided submissions in response to the NOITTA, together with supporting evidence.  The key points that were made at that time by Condor Migration were as follows:

   ·It was conceded by Mastermans that Shelley Wang had been underpaid and that this was a clear breach of regulation 2.79(3).  This was due to administrative deficiencies within Mastermans, that have been immediately rectified.  Shelly Wang has now been appropriately compensated, with interest.

   ·Mastermans have been fully cooperative with Border Force, in terms of the provision of requested documents and information.

   ·In regards the alleged breach of regulation 2.86(2) (ensure sponsored person works in the nominated occupation), Ms Wang does work predominantly in her sponsored position (as confirmed by various supporting customer and supplier letters, who each indicate their daily client dealings with Mastermans were via Shelly Wang), and any work on the factory floor was only very sporadic, during either peak periods or at times when Mastermans were otherwise short-staffed.

   ·In regards the alleged breach of regulation 2.90, Mastermans have not provided false or misleading information.  Two sets of pay records (‘original’ and ‘MYOB’) were submitted in response to the regulation 2.83 notice in good faith, and in order to clearly show the steps that have been taken to rectify the incorrect pay records.

   19.On 7 July 2021 the Delegate found that breaches of each of regulations 2.89, 2.79, 2.86 and 2.90 were made out, and the Delegate found - on the basis of the evidence and Mastermans responses to the NOITTA - as follows:

   ·Mastermans admit to having breached regulation 2.79(3) (obligation to ensure equivalent employment terms), which also makes out a breach of regulation 2.89 (failure to satisfy sponsorship obligation).

   ·The Delegate attached minimal weight to evidence from customers and suppliers attesting to their dealings with Shelly Wang as the Distribution Manager, largely by reason that their e-mail correspondence was all addressed to [email protected], rather than to a dedicated Mastermans e-mail address in Shelly Wang’s own name.

   ·On the evidence, the Delegate was not persuaded that Shelly Wang’s duties aligned with the high-level tasks of a Supply and Distribution Manager, as described in the ANZSCO.

   ·As to the breach of regulation 2.90 (provision of false or misleading information) the Delegate found, inter alia that:

   -    Although acknowledging that Mastermans had provided two sets of payslips (old system and MYOB) voluntarily for the purpose of explaining the circumstances and to represent steps taken to rectify the breach of sponsorship obligations.  However, I find providing two sets of payslips to be misleading.  Therefore, the breach remains.  And…during this audit you have been found to have provided the Department with false or misleading information, which reflects poorly on your conduct in relation to Immigration.  [emphasis not in the original, yet included here by the Tribunal]

   20.On 22 July 2021 Mastermans applied to the Tribunal for review of the Delegate’s decision.  A hearing was conducted on 28 March 2023 and oral evidence was received from Ms Shelly Wang and from Mr Jason Kien Khong Ha.

   21.Mr Ha informed the Tribunal that his family had come from Malaysia and had purchased Mastermans Noodles as a going concern from a more distant relative, Mr Kui Poh Wong (‘Mr Wong’).  The company had been established in Brisbane many years previously.  As part of the purchase Mr Wong was retained as the Mastermans Production Manager, largely by reason that all of the trading goodwill for Mastermans was reposed in Mr Wong, and because all the vital knowledge relating to the operation of the business was “carried around in the head of Mr Wong”, and had never been properly documented.  Mr Ha further informed the Tribunal that it proved to be very difficult to obtain necessary information out of Mr Wong, who continued to keep a very tight personal rein over every aspect of business operations, even notwithstanding the fact of his no longer being the sole operator.  This problem was exacerbated by Mr Wong having a serious health condition, which necessitated his having surgery and a long period away from the factory, in order to convalesce, after which Mr Wong had prevaricated for a long time about his return to full duties.  Things became so bad in this regard that, eventually, Mastermans had to insist on a meeting with Mr Wong at which he was encouraged that he should retire, once and for all.  Mr Ha says that he only took over full control of the business (including all aspects of financial control and human resource management) at this juncture and was then confronted by the stark reality that there were totally inadequate systems and documentation to enable him to even begin to understand what had occurred previously, whilst still simultaneously trying to run the business as a going concern.

   22.Mr Ha further stated that the site visit by Australian Border Force had occurred very shortly after this, and the business systems at Mastermans were still in a state of considerable confusion at the time.  He stated that Shelly Wang was originally recruited and employed when Mr Wong was still the Production Manager and her role as Supply and Distribution Manager had become quite integral to the day-to-day operations of the Mastermans business, as Shelly Wang was the point of interface between suppliers and customers, and the factory operation. 

   23.In part, the Delegate had refused to accept the importance of Shelly Wang’s position at Mastermans and had concluded that she was only employed in some lesser role, by reason that e-mail testimonials from clients and suppliers who had indicated that their point of liaison with Mastermans was via Shelly Wang were each addressed to the email address of the Mastermans Production Manager Kui Poh Wong: [email protected].  In relation to this piece of evidence, Mr Ha told the Tribunal that, for a very long time Mastermans had only ever had the one e-mail address, as that had been the way in which the business was set up and operated by Mr Wong.  Even now that Mr Ha is in full control of day-to-day operations and the business has also grown considerably, Mr Ha says that he remains loathe to change this arrangement, given that he has come to be aware that existing clientele and suppliers are so thoroughly familiar with that specific e-mail address, such that he is conscious that there is now an aspect of goodwill attached to it.

   24.Mr Ha was quite adamant that Shelly Wang does predominantly perform the duties specified in her employment agreement, and that her role is an office-based one, dealing with customers and suppliers and overseeing the daily tasks of Mastermans’ delivery drivers.  At the time of Covid, Mr Ha said that Mastermans was faced with considerable difficulties caused by staff absences, as well as an inability to recruit new factory workers, such that during Covid Mr Ha readily conceeded that all staff (including the directors, and Shelly Wang) were each required to do many things that they would not ordinarily do.  However prior to Covid, Mr Ha estimates that Shelly Wang would only assist with tasks outside her position description on an ad hoc basis, and that this would never have been any more than perhaps 5% of the time.

   25.In relation to the specific issue regarding Shelly Wang’s underpayment, Mr Ha admits that he and the other directors were not even aware of the discrepancy between Shelly Wang’s contracted salary and her salary payments to her bank account, at least not until the time of Mastermans being required to collate documents and other materials in response to the Border Force information request made under regulation 2.83. 

   26.At the time of collating the necessary documents Mr Ha says that it was realised that when the new employment agreement had been signed by Shelly Wang in February of 2017 (when Mr Wong was still very much in charge), the automatic bank transfer details regarding her salary had not been similarly updated.  Nobody, including Shelly Wang herself, had then realised the fact of her being underpaid until the time of the analysis of the documents that were being collated for on-forwarding to Border Force.  At this stage, Mr Ha says that Mastermans took immediate steps to fix the problem.  This included paying Shelly Wang a lump sum of arrears in salary, together with 2% interest as compensation.  Mr Ha admits that this was completely due to inadequate business systems, and says that Mastermans takes full responsibility for the fact of the problem.

   27.Regarding the Delegate’s conclusion that Mastermans were in breach of Regulation 2.90 by reason of their having provided Australian Border Force on 24 December 2020 with false and misleading information, in the form of two sets of payslips, Mr Ha says that two sets of pay records were only ever provided solely in order to demonstrate how the problem had arisen, and the steps that had since been taken – in the form of a newly implemented MYOB system – in order to rectify the problem and to ensure there would be no re-occurrence.  Here, the intent had also been to enable Border Force to see that the repayment of unpaid salary had been correctly calculated.

   28.In her evidence before the Tribunal Shelly Wang informed that Mastermans had been very kind to her and that she did not feel exploited.  She explained the scope of her role and duties and confirmed that she herself had not even been aware of the fact of her being underpaid, until this was advised to her by Jason Ha, in late 2020.  Ms Wang also explained that English is not her first language and she had felt an extraordinary sense of stress and of being confronted when two uniformed Australian Border Force Officers had arrived at work one day, unannounced in the middle of a busy shift, such that she was unable to formulate clear responses to the officers, in English. 

   29.In a statutory declaration dated 10 March 2021 in which Ms Wang goes into considerable detail to explain the nature and scope of her role and duties at Mastermans, Shelly Wang also said, in relation to the Australian Border Force visit:

   At the face of the questions about my duties, instead of formulating a step-by-step guide through the lifecycle of our operations and dissect my role within the organisation, instead I started going through the work on my computer screen (what I was doing at the time of site visit)    

1. The Tribunal accepts the evidence given by each of Jason Ha and Shelly Wang as having been truthful and candid.   Their explanations are accepted as plausible, and likely, given that a lack of business sophistication is oftentimes the unfortunate hallmark of many small and medium sized business operations examined by the Tribunal in this business sponsorship review jurisdiction.

   Failure to satisfy a sponsorship obligation: regulation 2.89

2. The Minister (and the Tribunal on review) may take one or more of the actions in s.140M if satisfied the sponsor has failed to satisfy a sponsorship obligation referred to in Division 2.19 of the Regulations: reg 2.89(2).

   32.Mastermans readily admits that Shelly Wang was underpaid, in consequence of admitted inadequacies in its payroll and accounting systems.  The admission makes out the basis for a finding by the Tribunal that Mastermans have breached regulation 2.79.  In consequence of same, Mastermans are also in breach of regulation 2.89.

   33.In regards the putative breach of regulation 2.86 (obligation to ensure the primary sponsored person works in the nominated occupation), the Tribunal takes a contrary view to that taken by the Delegate previously, and is now satisfied on the evidence before it that Shelly Wang does work the vast preponderance of the time in her nominated occupation.  The Tribunal is not so rigid as to insist on a prescriptive adherence to the dictates of the position description, as to adopt such an approach would be to ignore the day-to-day realities of operating a small business.  The requirement may be satisfied if the sponsored employee works predominantly in their specified role, if any other tasks outside those nominated in the approved position description are performed only occasionally, on an ad hoc basis.  In this case, the evidence satisfies that requirement.

   34.Similarly the Tribunal is completely satisfied that Mastermans have not provided the Department with false or misleading information, in breach of regulation 2.90. 

   35.In this regard the Tribunal determines that the previous determination by the Delegate, and the ostensible basis for that finding, as now excerpted in paragraph [19] of these reasons amounts to an “unreasonable” finding of the type identified by the English Court of Appeal in Associated Provincial Picture Houses Ltd v Wednesbury Corporation ([1948] 1 KB 223). Such a finding was not ever open to the Delegate, and could not in all reasonableness ever have been made in light of the reasons given by Mastermans at that time for the production to Australian Border Force of two sets of payroll records. Accordingly, this finding must be set aside by the Tribunal on this de novo exercise of its review jurisdiction, by reason that the correct or preferable decision is that Mastermans have not provided false or misleading information in the manner alleged. 

   36.In light of the foregoing, the Tribunal is satisfied that the prescribed circumstance in regulation 2.89 exists for the purpose of s.140M of the Act.

   Action to be taken

3. It is next necessary to consider whether one or more of the actions mentioned in s.140M should be taken.

4. In considering what action to take, the Tribunal has had regard to the prescribed criteria in regulation 2.89(3)(a) – (k) (inclusive), as now extracted, in the attachment to this decision.

5. Regarding the various matters adumbrated in regulation 2.89(3), the Tribunal notes that Mastermans have taken full responsibility for the fact of Ms Wang’s underpayment and have taken swift steps to compensate her and to put in place better systems (MYOB) to ensure that the problem is not repeated.  Mastermans have also been fully cooperative with Australian Border Force; and have acknowledged that the underpayment of sponsored foreign workers must be regarded as serious. 

6. Although the breach by means of an underpayment to Shelly Wang continued for nearly two years, and would not likely have been realised for a long time further but for the fact of the Australian Border Force monitoring, the Tribunal is satisfied that the breach was unintentional, and is not marked by any aspect of predatory conduct on the part of Mastermans; and arose as the result of negligence in consequence of the specific command and control dynamic and an aspect of amateurism and human error within Mastermans, at the time of the specific payroll oversight that gave rise to the breach.

   41.Considering the totality of the circumstances, and having regard to the prescribed criteria the Tribunal finds that the action mentioned in s.140M(1)(c) should be taken and Mastermans should be barred from making future applications for approval as a work sponsor for a specified period of twelve (12) months, from the date of the Delegate’s original decision (7 July 2021).

   DECISION

   42.The Tribunal sets aside the decision under review and substitutes a decision finding as follows:

   ·     the Applicant has breached regulations 2.79(3)(iii) and 2.89(2);

   ·     has not breached either regulation 2.86, or regulation 2.90; and

   ·     now imposes a sponsorship bar for a period of 12 months, commencing from 7 July 2021.

   Andrew McLean Williams
   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.

   …