MISSMKCOFFEE Pty Ltd v Minister for Immigration and Multicultural Affairs
[2025] FedCFamC2G 64
•22 January 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
MISSMKCOFFEE Pty Ltd v Minister for Immigration and Multicultural Affairs [2025] FedCFamC2G 64
File number(s): BRG 336 of 2024 Judgment of: JUDGE COULTHARD Date of judgment: 22 January 2025 Catchwords: MIGRATION – Employer Nomination Permanent Appointment Visa – judicial review of a decision of the Administrative Appeals Tribunal – legal unreasonableness – irrationality or illogicality – materially correct understanding of the law – no jurisdictional error established– application dismissed Legislation: A New Tax System (Pay As You Go) Act 1999 (Cth) ss 12-35, 16-25
Acts Interpretation Act 1901 (Cth) s 2B
Migration Act 1958 (Cth) s 65
Migration Regulations 1994 (Cth) reg 1.13A,1.13B, 5.19, cl 186.233
Superannuation Guarantee Administration Act 1992 (Cth)
Superannuation Guarantee Charge Act 1992 (Cth)
Cases cited: AB119 v Minster for Home Affairs [2020] FCA 136
AU v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2022] FCAFC 125; (2022) 295 FCR 315
BLD15 v Minister for Immigration and Border Protection (No 2) [2018] FCA 790; (2018) 75 AAR 129
Bluescope Steel (AIS) Pty Ltd v Australian Workers Union [2019] FCAFC 84; (2019) 270 FCR 359
Collector of Customs v Pozzolanic [1993] FCA 456; (1993) 43 FCR 280
EHF17 v Minister for Immigration and Border Protection [2019] FCA 1681; (2019) 272 FCR 409
Hansen v Patrick [2018] QCA 298; [2019] 3 Qd R 93
Keay v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2022] FedCFamC2G 223; (2022) 369 FLR 42
LPDT v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2024] HCA 12; (2024) 98 ALJR 610
Minister for Immigration and Citizenship v Li [2013] HCA 18; (2013) 249 CLR 332
Minister for Immigration and Citizenship v SZMDS [2010] HCA 16; (2010) 240 CLR 611
Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259
NRFX v Minister for Immigration, Citizenship and Multicultural Affairs [2023] FCAFC 187; (2023) 300 FCR 582
Parker v Comptroller-General of Customs [2009] HCA 7; (2009) 252 ALR 619
S14/2002 v Refugee Review Tribunal [2004] FCAFC 171
Sri Guru Gobind Singh Transport Pty Ltd v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2022] FCA 118
Sullivan v Civil Aviation Safety Authority [2014] FCAFC 93; (2014) 226 FCR 555
ZG Operation Australia Pty Ltd v Jamsek [2022] HCA 2; (2022) 275 CLR 254
Division: Division 2 General Federal Law Number of paragraphs: 126 Date of last submission/s: 9 December 2024 Date of hearing: 9 December 2024 Place: Brisbane Counsel for the Applicant: Mr Lake of Counsel Solicitor for the Applicant: Ramsden Lawyers Counsel for the Respondents: Mr Byrnes of Counsel Solicitor for the Respondents: Sparke Helmore Second Respondent: Submitting appearance save as to costs. ORDERS
BRG 336 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MISSMKCOFFEE PTY LTD
Applicant
AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS
First Respondent
ADMINISTRATIVE REVIEW TRIBUNAL
Second Respondent
ORDER MADE BY:
JUDGE COULTHARD
DATE OF ORDER:
22 JANUARY 2025
THE COURT ORDERS THAT:
1.The name of the first respondent be changed to “Minister for Immigration and Multicultural Affairs”.
2.The name of the second respondent be changed to “Administrative Review Tribunal”.
3.The application is dismissed.
4.The applicant is to pay the first respondent’s costs, fixed in the amount of $8371.30.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE COULTHARD
INTRODUCTION
Before the Court, is an application for judicial review of a decision of the then Administrative Appeals Tribunal (“the Tribunal”) by which the Tribunal affirmed a decision of a delegate of the Minister for Home Affairs (as the Minister was then called) (“the delegate”) pursuant to
s 65 of the Migration Act 1958 (Cth) (“the Act”) refusing the applicant’s application for approval of the nomination of a position in Australia on the basis that the Tribunal was not satisfied that the applicant met reg 5.19(4)(b) of the Migration Regulations 1994 (Cth) (“the Regulations”).
These proceedings were listed for hearing concurrently with proceedings in BRG395 of 2024 (“the related proceedings”). After the hearing in these proceedings, the related proceedings were adjourned to a date to be fixed after the decision in these proceedings has been handed down.
BACKGROUND
Application for Employer Nomination
On 8 May 2020, MISSMKCOFFEE Pty Ltd (“the applicant”/ “MK Coffee”) applied for an Employer Nomination for a Permanent Appointment Visa Subclass 186 in the Temporary Residence Transition Scheme for the nominated position of Marketing Specialist (ANZSCO 2251-13) (“the nomination application”) (Court Book (“CB”) 1-13). MK Coffee nominated Mr Fei Zhao (“Mr Zhao”) for the nominated position. On the same date, Mr Zhao applied for an Employer Nomination Scheme Subclass 186 visa (“the employee visa application”).
On 11 August 2021, the delegate refused to grant the applicant the visa on the basis that the nomination did not meet the requirements in reg 5.19(5)(n) of the Regulations (CB 323-326). As a consequence, the delegate refused the employee visa application because the delegate was not satisfied that cl 186.233 of Schedule 2 of the Regulations was satisfied given that a delegate had refused the nomination application. It is that decision of the delegate which is the subject of the related proceedings.
Application for review to the Administrative Appeals Tribunal
On 23 August 2021, the applicant applied to the Tribunal for a review of the delegate’s decision (CB 327-333). The applicant appointed a lawyer to act as its representative and authorised recipient (“the applicant’s agent”) (CB 330; 334).
On 25 July 2022, the Tribunal wrote to the applicant inviting it to provide information. The Tribunal stated that as the application for nomination was made under the Temporary Residence Transition nomination stream, it required updated and current information addressing the criteria in regs 5.19(4) and (5) of the Regulations and gave examples of the type of information the applicant should provide (CB 341-344).
On 13 November 2023, the applicant’s agent provided the Tribunal with a written submission and supporting documents (CB 350-533).
On 31 January 2024, the Tribunal invited the applicant to attend a hearing on 15 February 2024 to give evidence and present arguments relating to the issues arising in its case, stating that it was unable to make a favourable decision based on the information before it alone (CB 534-537).
On 15 February 2024, the applicant attended the hearing (CB 546-551). The applicant was assisted by his agent and an interpreter in the English and Mandarin languages.
After the hearing, on 6 March 2024, the applicant’s agent provided a written submission to the Tribunal as to why adverse information should be disregarded and attached supporting documents (CB 561-634).
On 15 May 2024, the Tribunal affirmed the delegate’s decision and gave written reasons for its decision (“Decision”) (CB 640-656).
THE TRIBUNAL’S DECISION
The Tribunal identified that the issue was whether the applicant meets the general requirement for approval of the nomination set out in reg 5.19(4) of the Regulations and the stream specific requirements set out in reg 5.19(5) of the Regulations and identified that for the nomination to be approved all requirements must be met ([13]). The Tribunal set out the terms of
reg 5.19(4)(b), the definition of adverse information in reg 1.13A and the definition of “associate” in reg 1.13B ([21]-[23]).
The Tribunal noted that by the end of the 2017 financial year, Mr Zhao had purchased MK Coffee and that the business operates as a Café in which students are taught to be baristas and that the business also sells coffee ([15] and [17]).
The Tribunal then summarised the evidence given by Mr Zhao at the hearing as follows ([24]-[27]):
(a)Mr Zhao volunteered at the hearing that for at least two years over 2017 and 2018, “he had been employing and paying some staff in cash most notably a barista trainer Mr Genaro Benmayor.” ([24]);
(b)The Tribunal put to Mr Zhao that since he advised that he had paid some staff including a barista trainer in cash for at least the 2017 and 2018 years and had not paid PAYG tax for the staff nor paid superannuation for them as well as potentially not having them covered by workers compensation, this would contravene taxation laws and may be adverse information. The Tribunal said to Mr Zhao that as such the applicant may not satisfy reg 5.19(4)(b) and this may be part or all of the reason to affirm the delegate’s decision ([25]);
(c)After a brief adjournment, Mr Zhao said that when he acquired the business there were a lot of things that he did not understand, he could not find a barista trainer and had agreed to pay the trainer Mr Benmayor in cash. He said that he had made some mistakes, was sorry, and was willing to reimburse for the PAYG and superannuation ([27]).
The Tribunal said in respect of the information volunteered by Mr Zhao (at [24]) that “these facts” were conceded as correct in the letter dated 6 March 2024 from the applicant’s agent to the Tribunal ([24]).
The Tribunal then made the following findings under the heading “Consideration” (Decision [30]-[32]):
(a)PAYG withholding tax is covered by legislation including A New Tax System (Pay as you go) Act 199 [sic] No. 178. That Act makes it clear that taxpayers must meet their annual income tax liability and are required to pay amounts of their income at regular intervals as it is earned during the year. The system for collecting these amounts is called “Pay as you go” (PAYG). Sections 12-35 states that “an entity must withhold an amount from salary, wages, commissions, bonuses or allowances it pays to an individual as an employee” [30];
(b)The Australian taxation office takes these matters very seriously and that there are several references on their website to the shadow economy and that the website refers to “activities that take place outside or abuse the tax and regulatory system for example when not all income is declared and when people demand (or pay for) cash on [sic] hand to avoid obligations as well as other illegal activities such as … sham contracting.” [31];
(c)The letter from the agent dated 6 March 2024 advises that Mr Zhao acknowledges “he did the wrong thing by paying Mr Benmayor in cash irrespective of whether Mr Benmayor independently reports the income for tax purposes as a contractor or not” and that “Mr Zhao also acknowledges the seriousness of paying unreported cash to employees or contractors as this may also impact on a person’s right to superannuation and being paid an acceptable wage.” [32].
The Tribunal then went on to make the following finding ([33]):
The Tribunal finds that the applicant has contravened a law of the Commonwealth namely A New Tax System (Pay as you go) Act 199 [sic] No. 178 over a period of at least two years from 2017 to 2018 by paying a barista trainer Mr Benmayor in cash and also, according to the agent’s submission, a second trainer perhaps for lesser amounts. The applicant did not deduct PAYG withholding tax and did not pay superannuation in respect of these staff. It is unclear whether the two staff would have been covered by Workcover, so the Tribunal is not making a finding with regard to whether Workcover legislation was contravened or not. For clarity no decision is being made as to whether the staff paid in cash were covered or not by Workcover.
The Tribunal then concluded by saying that given the above findings it is not satisfied that
reg 5.19(4)(b)(i) is met ([34]). Having made that finding the Tribunal stated that it would consider if it were reasonable to disregard the adverse information such that reg 5.19(4)(b)(ii) is satisfied ([35]).
Before undertaking that consideration (commencing at [50]), the Tribunal summarised the applicant’s agent’s written submission dated 6 March 2024 as to why the applicant’s agent contended that the adverse information should be disregarded ([36]-[49]).
Under the heading “The Tribunal’s consideration of whether it is reasonable to disregard adverse information”, the Tribunal referred to the Departmental policy (PAM3: Div5.3/Reg5.19) on factors that may be considered when evaluating whether to disregard adverse information (“the policy”) ([50]). The Tribunal then went on to consider each of the factors in the policy ([52]-[79]). It is useful to summarise the Tribunal’s consideration of these factors in some detail because of the complaint the applicant makes in ground two of the second further amended application as to the Tribunal’s numerous references in those paragraphs of its reasons to “illegality”, “illegal behaviour” and “illegal activity”.
As to the nature and seriousness of the adverse information, the Tribunal said ([52]-[56]):
(a)Mr Zhao as the owner of the business “paid two staff, a barista trainer and another trainer in cash for the 2017 and 2018 years and did not remit PAYG tax to the Australian Tax Office ATO nor did he make superannuation payments on behalf of these employees. This contravened the Australian Tax law being A new Tax System (Pay as you go) Act 199 [sic] No 178” [52];
(b)The ATO places a high degree of seriousness on such behaviour as evidenced by an extract from the ATO website where the ATO refers to matters that can be reported in a tip-off including “demanding or paying for work cash in hand to avoid obligations” which is what has occurred in this case [53];
(c)An extract from the ATO website reads as follows [54]:
How to make a tip-off about community members who gain an unfair advantage by intentionally doing the wrong thing.
Importance of making a tip-off
Most Australians believe in a level playing field and feel it's unfair for others to gain a competitive advantage by intentionally doing the wrong thing. This puts pressure on Australians who are doing the right thing and has broader impacts on our community.
We are committed to tackling illegal activity and behaviour of concern, especially when it comes to phoenix, shadow economy, and tax evasion to protect honest businesses and the community.
Making a tip-off is not just limited to tax and superannuation issues. We want to hear when someone is gaining a competitive advantage over those who are doing the right thing.
You can tell us your concern, if you or someone you know is doing the wrong thing. See the fight against tax crime.
(d)The ATO denounces this as allowing staff members to gain an unfair advantage by intentionally doing the wrong thing; putting pressure on Australians who are doing the right thing and inflicting a negative impact on the wider community and it is designated [by the ATO] as “tax evasion”, a “tax crime” and “illegal activity and behaviour of concern” [54];
(e)The agent’s argument that the arrangement was not entered into to take advantage of Mr Benmayor or other staff but rather at their request seems to infer that there is no victim in this illegal activity, but the ATO makes clear there are multiple victims [55];
(f)Significant weight is placed on the seriousness of the adverse behaviour because the ATO places significance on the seriousness of the illegal behaviour [56].
As to whether the adverse information arose recently or a long time ago, the Tribunal said ([57]-[61]):
(a)Some weight is given to the fact that the illegal behaviour occurred some six years ago however the Tribunal places greater weight on the fact that the applicant continued with the illegal activity for two years with at least two staff [57];
(b)It placed some limited weight on the applicant’s submission that it was desperate to keep the business operating and succumbed to the request of the employees to be paid cash but placed greater weight on the fact that employers who fail to make their PAYG payments have any number of excuses to support their illegal behaviour. The Tribunal placed. greater weight on the fact that Mr Zhao could have made further efforts to employ a barista trainer who would have agreed to be paid on the books but there is scant evidence of that [58];
(c)Mr Zhao submitted that he did not know that paying staff cash and not reporting it, not withholding PAYG and not paying superannuation was wrong at the time although he knows it now. However, Mr Zhao ensured that he reported his own income and withheld PAYG tax from his income for the years 2017 onwards [59];
(d)It was implausible that Mr Zhao as a business owner would be aware of obligations to report his own wages, withhold PAYG and pay superannuation on his behalf and not be aware of those obligations for other staff [60];
(e)Mr Zhao could have asked the advice of his accountant who has been with him for seven years and been advised that he needed receipts from staff paid in cash so that he could report this as contractor payments as well as requiring an ABN from the staff but Mr Zhao knew that Mr Benmayor would not agree to this arrangement as Mr Zhao told the Tribunal that Mr Benmayor did not want his earnings from the business reported [61];
(f)It gives considerable weight to the evidence that Mr Zhao was at best ‘wilfully blind’ to the illegality of these arrangements because they suited his ends to have a barista trainer [61].
As to how the adverse information arose including the credibility of the source of the adverse information, whether the information adverse information had been substantiated or, if unsubstantiated, the credibility of the source, the Tribunal said it gave some weight to the honest admission by the applicant of this illegal activity but gives more weight to the fact that the applicant has not chosen to seek advice from the accountant about restitution nor has he attempted to make restitution until the Tribunal raised this matter in the hearing [62].
As to whether the conduct or circumstance is likely to reoccur including whether steps have been taken to guard against this, the Tribunal said ([63]-[67]):
(a)It noted that the applicant’s agent emphasised that Mr Zhao had dedicated himself to becoming a responsible business owner over the years seeking advice from the accountant such that the business can operate within employment and taxation laws and that since 2019, Mr Zhao now pays all of the trainers on the books and had put in place steps to guard against this occurring again [63];
(b)The accountant was rightly cautious in its equivocal assessment of whether any further cash payments to staff have been made because it is impossible to know if a business owner has illegally paid cash to other staff since there is no paper trail [64];
(c)The steps said to have been taken to guard against this occurring again were not made clear and even if there were safeguards in place, the nature of illegal cash payments is that they leave no trail and are impossible to detect unless there is a tip off to the ATO [64];
(d)The only real safeguard to ensuring that these illegal payments have not occurred again in the past or will not occur in the future is the will and commitment of the applicant not to engage in these illegal activities however Mr Zhao was at best wilfully blind to making illegal cash payments for two years to two staff in order to save the business and there is scant evidence that he has not done so on other occasions. Weight is given to the fact that whilst Mr Zhao undertook barista training in June 2017 and June 2018, he persisted in making illegal payments to the two barista trainers over 2017 and 2018 [65];
(e)It gives weight to the agent’s statement that since Mr Benmayor ceased doing training work for the business, all employees have been paid on the books along with all legal entitlements [66];
(f)It gives weight to Mr Zhao’s assurances but gives more weight to the fact that he was wilfully blind to illegal cash payments to staff over a period of two years and took this course of action in desperation rather than take other steps to secure a barista trainer such as higher pay or allowances [66];
(g)It gives more weight to the fact that by their very nature cash payments are undetectable as recognised by the ATO [66];
(h)For the reasons above, it is not satisfied safeguards are effectively in place to prevent this occurring again or that there has not been a reoccurrence of the illegal behaviour or that there may not be a reoccurrence in the future [67].
As to how relevant the adverse information is to the person’s suitability as an approved sponsor or nominator, the Tribunal said that it had regard to whether any of the factors listed in the Department’s reasons to disregard apply here ([68]-[72]). The Court observes that the factors extracted from the policy set out in [68] are not factors to which the policy directs the attention of a decision maker in respect of the issue of how relevant the adverse information is to the person’s suitability as an approved sponsor or nominator. The factors appear in the policy in the section dealing with the factor of compelling circumstances affecting the interests of Australia.
The Tribunal then made the following statement ([69]):
There have been no sanctions or bars by the ABF against the applicant. Nonetheless, the adverse information is certainly an ATO issue, and they take the matter very seriously.
Further, under the heading in the decision as to how relevant the adverse information is to the person’s suitability, the Tribunal said that it had considered the following circumstances in the Department’s reasons [sic] and then listed circumstances in the policy which appear under the heading in the policy ‘3.4.2.2 Circumstances in which it may be reasonable to disregard adverse information’. Again, the Court observes that these circumstances do not appear to relate to the factor of how relevant the adverse information is to suitability. The Tribunal went on to make the following statements at ([71]):
(a)There is no warning given by the ABF, nor have they been barred by the ABF or received a penalty for previous actions;
(b)The Tribunal has already considered and weighed whether the applicant has sufficient or any safeguards in place to ensure their adverse conduct is not repeated and has found that is not possible to be satisfied on this point.
The Tribunal then said at ([72]):
It is noted that the applicant has an overall record of “good behaviour” in regard to the nominated employee however the adverse information far from being “less serious issues” is taken as a “tax crime” and “illegal activity” and “behaviour of concern” by the ATO.
Then at [73] said:
Nonetheless, Tribunal finds that the adverse information would not affect their suitability as an approved sponsor or nominator and this is given some weight.
As to whether there are any compelling circumstances affecting the interests of Australia, the Tribunal said it placed limited weight on the applicant’s argument that compelling circumstances are to be found in the valuable hospitality skills and training given to baristas since they are in such demand and the barista trainer working with the applicant would readily be employed in another business and the other employees would also readily find work since there are shortages in the hospitality sector ([74]).
As to the submission that a balance should be found against the impact of affirming (the delegate’s decision) because the business would likely close, the Tribunal considered that as the barista trainer and other employees are in demand the major negative impact would be for Mr Zhao whose actions lead [sic] to the adverse information ([76]). The Tribunal then went on to say that there is scant evidence the cash payments did not reoccur, however, even if the illegal practice did not reoccur more weight is given to the seriousness of the adverse information and the strong position the ATO takes to this form of tax evasion ([78]). The Tribunal said that, as such, it placed limited weight on the argument the closure of the business would not be a proportionate consequence and more weight on the fact that Mr Zhao was, at best, wilfully blind and engaged in cash payments to two staff for two years a practice the ATO describes as a “tax crime” and “illegal activity and behaviour of concern”. The Tribunal said that it also places weight on that fact that Mr Zhao could have attracted a barista trainer who did not want to be paid in cash and that Mr Zhao gained an unfair advantage by intentionally doing the wrong thing.
The Tribunal then concluded that “taking all into account” it “finds for the reasons above” that it is not reasonable to disregard the adverse information about the nominator ([80]) and that as such reg 5.19(4)(ii) is not met ([81]).
The Tribunal then went on to consider regs 5.19(5)(3),(f) and (g) and whether it was satisfied that Mr Zhao was employed full time in the occupation of marketing specialist for a total period of at least two years during the period of three years immediately before the nomination application was made. In so doing, the Tribunal returned to the applicant’s evidence about cash payments. The Tribunal recounted that at the hearing the applicant said that he employed another barista trainer and other staff, but he paid them in cash for these two years at their request and agreed to the arrangement because he was desperate to fill the positions; that one of the employees had another business in Byron Bay and did not want his earnings recorded. The Tribunal further recounted that the applicant said to the Tribunal that he did not really know about it being illegal under taxation law to pay staff in cash and not deduct PAYG or pay superannuation (Decision [90]). He asked the Tribunal to give weight to his evidence that he employed some staff including a barista trainer and paid them cash ([91]). The Tribunal said that it chose that version, which it said was supported by the evidence post hearing ([92]).
PROCEEDINGS IN THIS COURT
These proceedings were commenced pursuant to s 476(1) of the Act by application filed on 18 June 2024. The applicant also filed an affidavit affirmed on 18 June 2024. The affidavit annexes a copy of the Tribunal’s decision.
Procedural orders were made permitting the applicant to file and serve an amended application and requiring it to file any additional evidence on which it seeks to rely and to file and serve written submissions. Orders were made requiring the first respondent to file any additional evidence on which it seeks to rely and requiring the first respondent to file and serve written submissions. Orders were also made as to the preparation, filing, and service of a Court Book.
On 8 November 2024, the applicant filed an amended application and on 12 November 2024 filed a further amended application.
Further procedural orders were made permitting the applicant to file and serve a second further amended application and any additional evidence on which it seeks to rely and requiring the applicant to file and serve written submissions on or before 26 November 2024. The first respondent was ordered to file and serve written submissions and any additional evidence on which it seeks to rely on or before 3 December 2024.
The applicant filed a second further amended application.
The material before the Court was the second further amended application, the applicant’s affidavit, the first respondent’s response, the applicant’s written submission, the first respondent’s written submissions and the Court Book.
CONSIDERATION
For the applicant to be successful, the Court must be satisfied that the Tribunal’s decision is affected by material jurisdictional error.
The grounds of review set out in the second further amended application are (without alteration but excluding the paragraphs that were struck through and excluding the underlining and bold type):
Ground 1: The Tribunal was legally unreasonable in finding that information it considered adverse to suitability would not affect suitability but then finding, contrary to authority, that the information was adverse information.
Particulars
1. The task of the Tribunal was to make a decision under s 65 Migration Act 1958 (the Act).
2. The Tribunal was obliged to reach a state of satisfaction reasonably and on a materially correct understanding of the Act and the Regulations.
3. Among criteria to be satisfied was that there was no known adverse information per reg 5.19(4)(b)(i).
4. The Tribunal was bound to apply the definition of ‘adverse information’ in reg 1.13A(1).
5. A separate element of the definition of ‘adverse information’ is the requirement of relevance to a person’s suitability: Keay v MICMSMA [2022] FedCFamC2G 223 [33].
6. The Tribunal found at Reasons [73] that information the Tribunal considered adverse would not affect the Applicant’s suitability.
7. The Tribunal found at Reasons [34] that there was adverse information.
8. It was legally unreasonable to find that information that would not affect suitability was adverse information.
9. Had the Tribunal found that there was no adverse information there was a realistic possibility that the decision could have been different.
10. Hence the error was material.
11. Hence the Tribunal fell into jurisdictional error.
Ground 2: The Tribunal was legally unreasonable in its consideration of regulation 5.19(4)(b)(ii) Migration Regulations 1994 to find that a range of acts were ‘illegal’ where it could not reasonably be satisfied that the acts contravened a rule of law.
Particulars
1.The task of the Tribunal was to make a decision under s 65 Migration Act 1958 (the Act).
2.The Tribunal was obliged to reach a state of satisfaction reasonably and on a materially correct understanding of the law.
3.The Tribunal found that a person associated with the Applicant (the Associated Person) had:
a.paid staff in cash (Act 1);
b.not withheld (or not deducted) PAYG tax (Act 2);
c.not paid (or not remitted) PAYG tax to the ATO (Act 3); and
d.not paid superannuation for staff (Act 4).
4.The Tribunal found some or all of Act 1, Act 2, Act 3, and Act 4:
a.to be illegal; or
b.to contravene a statute.
5.For the Tribunal to find illegality it must do so reasonably and on a materially correct understanding of the law being:
a.to identify with particularity the rule of law said to be contravened; and
b.to give proper, genuine and realistic consideration to whether the act contravened that rule of law.
6.For Act 1:
a.the Tribunal identified no rule of law that this act contravened; and
b.it was legally unreasonable for the Tribunal to find that Act 1 was an illegal act or behaviour.
7.For Act 2 and Act 3:
a.the Tribunal identified s 12-35 of the A New Tax System (Pay As You Go) Act 1999 (Cth) (the Provision) as the rule of law contravened;
b.the Tribunal did not give proper, genuine and realistic consideration to the elements of the Provision;
c.the Tribunal could not on the evidence reasonably find that the Provision was contravened; and
d.it was therefore legally unreasonable for the Tribunal to find that:
i.Act 2 was an illegal act or behaviour; or
ii.Act 3 was an illegal act or behaviour.
8.For Act 4:
a.the Tribunal identified no rule of law that this act contravened;
b.the Tribunal was bound to apply relevant law, being Keay v MICMSMA [2022] FedCFamC2G 223, that it is not an offence to not pay superannuation for staff and there is no legal obligation to pay superannuation; and
c.it was therefore legally unreasonable for the Tribunal to find that Act 4 was an illegal act or behaviour.
9.In the premises above, it was legally unreasonable for the Tribunal to conclude that the Associated Person had engaged in:
a.an illegal activity or activities;
b.an illegal behaviour or behaviours; or
c.an illegal practice.
10.The findings and conclusions of illegality by the Associated Person were a material part of the Tribunal’s consideration, having found that there was adverse information, to then find that it was not reasonable to disregard that information.
11.Had the Tribunal not made findings and conclusions of illegality by the Associated Person there was a realistic possibility that the decision could have been different.
12.The error was material.
13.The Tribunal fell into jurisdictional error.
The regulations
Subregulation 5.19(3) provides:
Approval of nomination
(3) The Minister must, in writing:
a.approve the nomination if the Minister is satisfied that the requirements set out in subregulation (4) are met; or
b.otherwise – refuse to approve the nomination.
Subregulation 5.19(4) sets out the general requirements to be met for the nomination to be approved. Relevantly to these proceedings, subregulation 5.19(4)(b) provides:
(4) The requirements to be met for the nomination to be approved are as follows:
a.…
b.either:
i.there is no adverse information know to Immigration about the nominator or a person associated with the nominator; or
ii.it is reasonable to disregard any adverse information known to Immigration about the nominator or a person associated with the nominator;
Associated with is defined in reg 1.13B. It is common ground that Mr Zhao is associated with the applicant. Mr Zhao is the sole director and shareholder of MK Coffee.
Adverse information is defined in reg 1.13A, relevantly, as follows:
Meaning of adverse information
(1) Adverse information about a person is any adverse information relevant to the person's suitability as:
(a) an approved sponsor; or
(b) a nominator (within the meaning of regulation 5.19).
(2) Without limiting subregulation (1), adverse information about a person includes information that the person:
(a) has contravened a law of the Commonwealth, a State or a Territory; or
(b) is under investigation, subject to disciplinary action or subject to legal proceedings in relation to a contravention of such a law; or
(c) has been the subject of administrative action (including being issued with a warning) for a possible contravention of such a law by a Department or regulatory authority that administers or enforces the law; or
(d) has become insolvent (within the meaning of section 95A of the Corporations Act 2001); or
(e) has given, or caused to be given, to the Minister, an officer, the Tribunal or an assessing authority a bogus document, or information that is false or misleading in a material particular.
(3) …
(4) …
Legal unreasonableness or illogicality/irrationality
The applicant pleads legal unreasonableness as the ground of review in both grounds one and two in the second further amended application. In ground one, the applicant pleads that the Tribunal was required to reach a state of satisfaction (with respect to adverse information) “reasonably and on a materially correct understanding of the Act and the Regulations”. In ground two, the applicant pleads that as to the required state of satisfaction in reg 5.19(4)(b)(ii), the Tribunal was “required to make the findings it made reasonably and on a materially correct understanding of the law being to identify with particularity the rule of law said to be contravened; and to give proper, genuine and realistic consideration to whether the act contravened that rule of law”.
Section 65 of the Act requires that, after considering a valid application for a visa, the Minister is to grant the visa if satisfied that, inter alia, the various criteria for the grant of the visa have been satisfied. Subregulation 5.19(3) requires that the Minister must approve the nomination if satisfied that the requirements in subreg 5.19(4) are met. Relevantly, subreg 5.19(4)(b) requires the Minister to be satisfied that either there is no adverse information about the nominator, or a person associated with the nominator; or, if satisfied that there is adverse information to be satisfied that it is reasonable to disregard the adverse information. s
The Minister (and Tribunal) is not here exercising a discretionary power: the nomination must be approved if the requisite state of satisfaction is reached about adverse information (as defined) and whether in the event there is adverse information it is reasonable to disregard it. As Derrington J explained in EHF17 v Minister for Immigration and Border Protection (2019) 272 FCR 409 (“EHF17”) (at [59]) and in AU v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2022) 295 FCR 315 (at 325), different considerations apply where the court is concerned with whether a jurisdictional fact exists than apply where the court is concerned with whether a jurisdictional error has occurred in the subsequent exercise of the power. In the latter, the restrictions on the courts’ power of review limit the courts’ ability to correct error, particularly factual error, whereas in the former the courts’ powers are not so limited. This is because in the former the absence of the required jurisdictional fact means that the purported exercise of power and its foundational authority is absent and so the substance of the review is or is akin to merits review (EHF17 at [97]; NRFX v Minister for Immigration, Citizenship and Multicultural Affairs (2023) 300 FCR 582 (“NRFX”) at [112] per Derrington J). Nevertheless, it is not a process of review in which the court will substitute its own view for that of the decision maker (EHF17 at [72] per Derrington J).
Whilst after the High Court’s decision in Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 the ground of legal unreasonableness may no longer be considered to be strictly limited to the Wednesbury formulation of unreasonableness, it is accepted that unreasonableness in the Wednesbury sense is limited to the exercise of a discretionary power and has no application to the formation of a statutory state of mind: Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611 (“SZMDS”) at 624-625 per Gummow ACJ and Kiefel J; at 647 per Crennan and Bell JJ. The formulation of legal unreasonableness as it applies to a statutorily required state of satisfaction is that of irrationality or illogicality in the formation of the state of satisfaction.
In SZMDS, Crennan and Bell JJ explained, in relation to the formation of a statutorily required state of mind, that “illogicality” or “irrationality” sufficient to give rise to jurisdictional error must mean the decision to which the Tribunal came, in relation to the state of satisfaction, is one at which no rational or logical decision maker could arrive on the same evidence and is of the same order as a complaint that a decision is “clearly unjust” or “arbitrary” or “capricious” or “unreasonable” in the sense that the state of satisfaction mandated by the statute imports a requirement that the opinion as to the state of satisfaction must be one that could be formed by a reasonable person (at 647-648). Their Honours went on to say that not every lapse in logic will give rise to jurisdictional error and that a court should be slow, although not unwilling, to interfere in an appropriate case. As to the approach to be applied, their Honours said (at 648):
But, the test for illogicality or irrationality must be to ask whether logical or rational or reasonable minds might adopt different reasoning or might differ in any decision or finding to be made on evidence upon which the decision is based. If probative evidence can give rise to different processes of reasoning and if logical or rational or reasonable minds might differ in respect of the conclusions to be drawn from that evidence, a decision cannot be said by a reviewing court to be illogical or irrational or unreasonable, simply because one conclusion has been preferred to another possible conclusion.
The illogicality or irrationality may arise in respect of the Tribunal’s findings on the way to the conclusion about the state of satisfaction and to the conclusion reached on those findings (SZMDS at 648 per Crennan and Bell JJ).
This not to say that the formation of a statutory state of satisfaction cannot be vitiated on grounds other than illogicality or irrationality. In NRFX at [111], Derrington J (referring to the High Court authority there cited) usefully explained the “errors” that might invalidate a state of mind that has been conferred on an administrative decision maker to form (referring to “Migrating towards a Principled Approach to Reviewing Jurisdictional Facts” (2020) 27 Australian Journal of Administrative Law 70 at 78) as being that:
(1)the state of mind so formed was illogical or irrational in the sense that it could not be formed by a rational or logical person in the circumstances;
(2)the state of mind is based on findings or inferences of fact which are not supported by logical grounds or, possibly, probative evidence;
(3)the state of mind is founded upon a misunderstanding of the law relating to the subject matter in respect of which the opinion is formed;
(4)…factors not relevant to the state of mind are taken into consideration or, a relevant factor has been ignored; and
(5)the formation of the state of mind was arbitrary, capricious, irrational, or not bona fide although this may well be within the scope of the illogicality and irrationality ground.
Although the nature of the courts’ power to review jurisdictional fact is not as limited as the power to review whether a jurisdictional error has occurred in the subsequent exercise of the power, nevertheless as noted in authorities such as SZMDS, a court should be slow, although not unwilling, to interfere in an appropriate case. This approach, as Derrington J said in NRFX, discloses that a sensitivity exists in relation to the courts’ intruding upon a task conferred by the legislature on a member of the Executive, and the grounds upon which judicial review will occur (at [112]). Further, it must be borne in mind that where the required state of satisfaction is as to a subjective jurisdictional fact the courts’ ability to examine the veracity of the state of satisfaction is more limited than in relation to an objective one (EHF17 at [61]).
It is evident that any finding of illogicality or irrationality (as with the other categories of error upon which the veracity of the state of mind can be tested) calls for an examination of the Tribunal’s findings on material questions of fact, reference to the evidence upon which those findings of fact were made and its reasons for the conclusions that it reached based on those findings by reference to the Tribunal’s written reasons for decision and the evidence that was before the Tribunal.
In scrutinising the reasons of the Tribunal for the purpose of discerning whether there is error it is well settled that a court should not be “concerned with looseness of language … nor with unhappy phrasing” and that the reasons are “not to be construed minutely and finely with an eye keenly attuned to the perception of error” (Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 271-272 per Brennan CJ, Toohey, McHugh and Gummow JJ referring to Collector of Customs v Pozzolanic (1993) 43 FCR 280).
Ground 1: legal unreasonableness when considering adverse information
In ground one, the applicant contends that the Tribunal was legally unreasonable in finding that information it considered adverse to suitability would not affect suitability but then finding, contrary to authority, that the information was adverse information.
By reference to the above identified categories of “error”, it seems to the Court that to the extent that the applicant pleads legal unreasonableness, the ground of review is perhaps more properly articulated as that the state of mind was vitiated by illogicality or irrationality (in the sense that it could not be formed by a rational or logical person in the circumstances) with respect to adverse information relevant to the applicant’s suitability; and/or that it was founded upon a misunderstanding of regs 5.19(4)(b) and 1.13A (as to the meaning of adverse information).
At [34] of the Decision, the Tribunal said:
Given the above findings, the Tribunal is not satisfied that reg 5.19(4)(b)(i) is met.
This can only mean that the Tribunal was not satisfied that there was no adverse information (known to Immigration) about the applicant. The reference to the ‘above findings’ (in [34]) can only sensibly be read as the findings that the Tribunal made in [30]-[33] under the heading ‘Consideration’ which findings followed the Tribunal’s summary of the evidence at [14]-[29].
For the purposes of considering ground one, the Tribunal found that the applicant had contravened a law of the Commonwealth namely A New Tax System (Pay As You Go) Act 1999 (Cth) (“the PAYG Act”), that is, that there was adverse information about the applicant for the purposes of subreg 1.13A(2)(a). What acts of the applicant the Tribunal found contravened the PAYG Act and whether the Tribunal’s decision is affected by error in that regard will be returned to in the Court’s consideration of ground two in the second further amended application.
After stating (at [34]) that it was not satisfied that subreg 5.19(4)(b)(i) was met, the Tribunal went on to consider whether it was satisfied that it was reasonable to disregard the adverse information. It concluded that it was not so satisfied (at [80]). In coming to that conclusion, the Tribunal considered the evidence having regard to the factors set out in the policy. As set out earlier in these reasons, the Tribunal considered the factor of how relevant the adverse information is to the applicant’s suitability as a nominator at [68] to [72] and concluded at [73]:
“Nonetheless, Tribunal finds that the adverse information would not affect their suitability as an approved sponsor or nominator and this is given some weight.” [underlining added]
The applicant submitted that it follows from [73] that the information the Tribunal considered adverse was not adverse information for the purposes of subreg 5.19(4). Hence, the applicant submitted, the only legally reasonable conclusion open to the Tribunal was that there was no adverse information about the applicant (Applicant’s submissions (“AS”) [27] - [28]).
The applicant’s submission requires a consideration of the proper construction of reg 1.13A and the Tribunal’s reasons as to the relevance of the adverse information to the applicant’s suitability as a nominator and whether it was reasonable to disregard the adverse information.
The construction issue
The applicant’s submission is that the proper construction of reg 1.13A is that the requirement of relevance to a person’s suitability as a sponsor or nominator is a separate element to the nature of the adverse information, and hence the Tribunal is required to assess whether the information is relevant to the suitability of a person as a sponsor or nominator in respect of all of the subsets of adverse information (AS [22]; [26]). The Court understands that the applicant is there referring to the subsets of adverse information in subreg 1.13A(2). In other words, the applicant’s submission is that if a finding is made that a person has, relevantly here, contravened a law of the Commonwealth it is still a requirement that the Minister (and the Tribunal) consider whether the contravention is relevant to the person’s suitability as a sponsor or nominator. The applicant submitted that, here, the Tribunal’s conclusion (at [73]) that the adverse information would not affect the applicant’s suitability was inconsistent with its statement at [34] that it was not satisfied that subreg 5.19(4)(b)(i) was met.
The first respondent disagrees with that construction of reg 1.13A and says that Parliament has specifically identified the matters listed in regulation 1.13A(2) as “adverse information” even though some of those matters might not usually be regarded as adverse (first respondent’s submissions (“FRS”) [11]). The first respondent accepts that the chapeau to regulation 1.13A provides that “adverse information” is any information relevant to the person’s suitability as a nominator but says that regulation 1.13A(2) sets out a non-exhaustive list of matters that are included in the meaning of adverse information including contravention of a law of the Commonwealth (FRS [10]). The Court understands this submission to be that those matters listed in reg 1.13A(2) are to be taken to be or to constitute information which, because of its nature, is relevant to a person’s suitability as a sponsor or nominator.
In Keay v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2022) 369 FLR 42 (“Keay”), a decision of this Court, Lucev J considered the definition of adverse information in the current version of subregs 1.13A(1) and (2). His Honour said that the use of the word “any” makes the phrase “any adverse information” one of wide import ordinarily excluding limitation or qualification and which should be given as wide a construction as possible (at [33]). His Honour went on to say that this broad cast is not limited by subreg 1.13A(2) which “includes” a list of specific matters within the definition of “adverse information” (at [33]). Referring to Sri Guru Gobind Singh Transport Pty Ltd v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2022] FCA 118 (“Sri Guru”) (at [126]-[127] per Derrington J), Lucev J went on to say that the use of the word “includes” in this context enlarges but does not exhaust the definition of “adverse information”, and notwithstanding the broad cast of the phrase “any adverse information” ensures that the specific matters listed in subreg 1.13A(2) are designated as “adverse information”. His Honour then went on to consider the competing submissions as to whether it was still necessary for the matters listed in subreg 1.13A(2) to be relevant to the person’s suitability as a nominator and considered that a Tribunal is required to assess whether adverse information, including any contravention of a law of the Commonwealth under subreg 1.13A(2)(a), is relevant to the suitability of a person as a nominator (at [36]). In so considering, his Honour (at [35]) said:
The construction of reg.1.13A(1) and (2) of the Migration Regulation advocated for by the Minister cannot, with respect, be correct. On its face, the requirement that the assessment of the relevance of the nature of the adverse information to the suitability of a person as an approved sponsor or nominator in reg 1.13A(1) of the Migration Regulation is a separate element to the nature of the adverse information therein. Were it not so, then it would be unnecessary to refer to the relevance of a person’s suitability as an approved sponsor or nominator. Regulation 1.13(2) of the Migration Regulations, whilst prescribing the matters specified therein to be “adverse information”, does not prescribe that those matters are to be taken as being relevant to the question of suitability as an approved sponsor or nominator, and in the absence of any such prescription the “adverse information” matter in reg 1.13(2) of the Migration Regulations ought to be assessed as to the relevance in the same manner as other types of “adverse information” in reg 1.13A(1) of the Migration Regulations.
The first respondent submitted that the consideration of that aspect of the interpretation of subreg 1.13A(2) by Lucev J in Keay was obiter given that the question did not fall to be determined because his Honour found that there had been no contravention of a Commonwealth law. Instead, the first respondent took the Court to the decision of Derrington J in Sri Guru.
In Sri Guru, Derrington J was concerned with a previous version of reg 1.13A. The version considered by his Honour relevantly provided as follows:
1.13A Meaning of adverse information
(1) Adverse information about a person is any adverse information relevant to the person’s suitability as:
(a) an approved sponsor; or
(b) a nominator (within the meaning of regulation 5.19); or
(c) a maker of a nomination in accordance with a labour agreement.
And includes information that the person, or a person associated with the person; \
(d) has been found guilty by a court of an offence under a Commonwealth, State or Territory law that relates to on or more of the matters referred to in subregulation (2); or
(e) has, to the satisfaction of a competent authority, acted in contravention of such a law; or
(f) has been the subject of administrative action (including being issued with a warning), by a competent authority, for a possible contravention of such a law; or
(g) is under investigation, subject to disciplinary action or subject to legal proceedings in relation to an alleged contravention of such a law; or
(h) has become insolvent within the meaning of subsections 5(2) and (3) of the Bankruptcy Act 1966 and section 95A of the Corporations Act 2001.
(2) …
(3) …
(4) …
The question of construction before his Honour was whether that for information to be “adverse information” it must fall within the categories identified in sub-paragraphs (d) to (h) of the definition by reading the words, “and includes” as “means and includes”. His Honour rejected that construction and held that the definition is an enlarging one and not an exhaustive one merely because of the word “includes” and because, on a natural reading, the reference in the chapeaux to “any adverse information” supports a broad construction to the phrase “and includes” (at [126]-[127]). The first respondent’s submission relies upon what his Honour went on to say in [128](b). At [128], his Honour said:
Rather, the operation of the definition of, “adverse information” is that it refers to any information which is adverse to the person’s suitability for one of the three identified capacities in sub-paragraphs (a) to (c). The inclusive statement from the words “and includes information” – being that in the following sub-paragraphs – provides a logical structure and operation of the definition for the following reasons:
(a) First, the matters in sub-paragraphs (d) to (h) are expressly identified as being time limited. That is, by sub-reg (3) the matters in question which might give rise to “adverse information”, must have occurred within the three years prior to the making of the relevant decision. The legislature has isolated those matters as having a limited operation for the purpose of the definition.
(b) Second, some of the matters there referred to might not usually be regarded as adverse. A reasonable and intelligent person would not necessarily regard an investigation into a person or a person being subject to disciplinary action or legal proceedings, to be adverse information. Similarly, being the subject of administrative action for a possible contravention of a law is also not, per se, adverse to the person in question. Similar comments can be made about the other sub-paragraphs. The point to be made is that the legislature has specifically identified such matters as “adverse information”, albeit it has given them a limited operational effect; ie three years.
(c) Third, for the purposes of reg 5.19, the consideration of adverse information is qualified by the obligations on the decision-maker to ascertain whether it is reasonable to disregard it. In other words, the potential scope of the operation of the definition of “adverse information” is ameliorated by the ability of the decision-maker to disregard a matter where appropriate. On that basis, there is no reason to impose any artificial restrictions upon the definition’s scope.
(d) Fourth, the proposed interpretation offered by the appellant is extremely restrictive. It would confine adverse information to the five specific matters in sub-paragraphs (d) to (h), the majority of which are limited to possible infractions of laws concerned with specific matters. The appellant’s construction would have the curious result that a person who has been known to have committed or is under investigation for drug trafficking would not fall within the operation of the section. Similarly, a person under investigation or convicted of serious dishonesty offences would not be a person in respect of which there is “adverse information”. Other examples are myriad. There are no textual or contextual matters which might justify such a construction.
It must first be observed that in the opening sentence of [128], his Honour referred to any information which is adverse to the person’s suitability. Of course, reg 1.13A, in its then and present version, does not define “adverse information” as “any information which is adverse to a person’s suitability” but as “any adverse information relevant to a person’s suitability.” The point of construction is that there are two limbs to the definition. The first is that the information must be adverse information. Information might be adverse about a person for any number of reasons. The second is that the adverse information must be relevant to a person’s suitability as a sponsor or nominator.
In reasoning as his Honour did in [128](b) that some of the matters referred to in sub-paragraphs (d) to (h) might not usually be regarded as adverse information and so the legislature is to be understood to have specifically identified such matters as “adverse information”, the Court does not understand his Honour to be deciding – as the first respondent contends – that the categories of adverse information identified in sub-paragraphs (2)(a)-(e) (of the present version of reg 1.13A) are to be taken to be relevant to suitability. The Court understands that his Honour was only deciding that information in one of the identified categories is adverse information, that is, it is information that is adverse about a person even if a reasonable and intelligent person might not necessarily regard the information as adverse about that person. It remains necessary to then determine whether information in one of the identified categories – which is taken as adverse information – is relevant to the person’s suitability. This point of construction was not before his Honour for consideration in Sri Guru.
The Court is persuaded by the construction preferred by Lucev J in Keay for the reasons his Honour gave.
The Tribunal’s finding on relevance to suitability and whether reasonable to disregard
The Tribunal having found (at [33]) that the applicant contravened a law of the Commonwealth, it was necessary, on the Court’s preferred construction, for it to consider whether the contravention was relevant to the applicant’s suitability as a sponsor and, if so, whether pursuant to subreg 5.19(4)(b)(ii) it was satisfied that it was reasonable to disregard the adverse information. Those were matters about which the Tribunal had to reach a state of satisfaction. It had to reach that state of satisfaction on a correct understanding of the law applied to logically probative evidence.
The Court is of the view that it is implicit in the Tribunal’s reasons at [33] that it considered the applicant’s contravention of the PAYG Act to be relevant to its suitability as a nominator. There is nothing in the Tribunal’s engagement with regs 5.19A and 1.13A (at [21]-[33]) which can, on a fair reading, be taken as demonstrating that the Tribunal misconstrued reg 1.13A so far as it was concerned with the question of relevance to suitability. That view is supported by the Tribunal’s consideration of the seriousness with which the ATO takes “these matters” (at [31]). Whilst the Tribunal does not use the terminology of relevance to suitability, the Court considers that a fair reading of [31] is that this is what the Tribunal was considering.
The Tribunal then went on to consider whether, pursuant to subreg 5.19(4)(b)(ii) it was reasonable to disregard the adverse information and in doing so considered how relevant the adverse information was to the applicant’s suitability as a nominator. What the Tribunal found in that regard requires a consideration of what, not construed minutely and finely with an eye keenly attuned to the perception of error, the Tribunal is taken to have meant in [73] of its reasons for Decision.
The first respondent submitted that where the Tribunal considered that there had been a contravention of a law of the Commonwealth and, accordingly, despite whether it affected suitability, it was not inconsistent to then say at [73] that the adverse information would not affect the applicant’s suitability as a nominator (FRS [14]). The first respondent submitted that in considering this factor it was implicit in the Tribunal’s reasons that the adverse information was relevant to the applicant’s suitability as the factor in the policy is concerned with “how relevant” the adverse information was to the applicant’s suitability (FRS [23]). That is true. The Tribunal would have considered whether it was reasonable to disregard the contravention of the PAYG Act even if the Court’s view as to the basis for the finding in [33] is not correct, that is, if the Tribunal had not considered relevance to suitability separately because of the construction of the definition of adverse information contended for by the first respondent in its primary submission.
As an alternative argument, the first respondent submitted that on a fair reading of the Tribunal’s reasons, in context, the statement at [73] is a mere error in the nature of a typographical error that does not give rise to jurisdictional error (FRS [15]-[26] referring to AB119 v Minster for Home Affairs [2020] FCA 136 at [30]; S14/2002 v Refugee Review Tribunal [2004] FCAFC 171 (“S14/2002”) at [27]-[35]) such that the Tribunal’s reasons should be read as a finding that the adverse information would affect suitability. In other words, the Tribunal mistakenly included the word “not” before the word “affect” in [73] (FRS [26]). In contending for that alternative position, the first respondent submitted that at [33]-[34] of its reasons the Tribunal, mindful of the meaning of adverse information and meaningful engaging with it, formed the view that the contravention was relevant to the applicant’s suitability (FRS [18]-[21]). Having so decided, the first respondent submitted that the Tribunal’s statement at [73] did not occur in the context of the Tribunal’s analysis as to whether there was adverse information but in the context of its analysis as to whether it was reasonable to disregard the adverse information and, in particular, in the context of the guidance in the policy that decision makers consider how relevant the adverse information is to the person’s suitability (FRS [22]).
The first respondent submitted that the word “nonetheless” at the start of [73] links that paragraph to [72] and, in particular, to the applicant’s overall record of “good behaviour”. In that context, the first respondent submitted that it does not make sense for the Tribunal to go on to find that the adverse information would “not” affect the suitability of the applicant as a nominator (FRS [25]). The first respondent further submitted that a finding that the contravention would not affect suitability is not supported by the Tribunal’s criticism about safeguards (at [71]) and the ATO’s concerns (at [72]) and its analysis concluding at [34] (FRS [25]). So, on the reading urged by the first respondent, the Tribunal is to be taken to have found that the contravention would affect suitability.
The issue is one of construction of the Tribunal’s reasons. The correct approach to the issue is to have regard to the reasons of the Tribunal as a whole and to the context of the particular part of the reasons in which the sentence in question occurred (S14/2002 at [28]). To remove the word “not” from the sentence in [73] would be a major, indeed radical step as a matter of construction (to use the words of Carr J in S14/2002 at [29]).
At [72] of its reasons, the Tribunal is balancing on the one hand the applicant’s overall record of good behaviour in regard to the nominated employee (Mr Zhao) (in respect of whom PAYG tax was withheld and remitted to the ATO) against the seriousness of the adverse information by reference to the view taken by the ATO about, for example, non-compliance with tax obligations when people are paid cash in hand to avoid those obligations (referred to by the Tribunal for example at [31], [53], [54], [55], [56], [69]). That is the context in which the Tribunal then commences [73] with the word “nonetheless”. The Court takes the view that the logical reading of [73] is that the Tribunal found the adverse information, whilst far from being “less serious”, would not affect the applicant’s suitability as a nominator. The Tribunal then goes on to say (also in [73]) that it gives that finding “some weight”.
In assessing how relevant the adverse information is to the applicant’s suitability as a nominator, the Tribunal uses the word “affect”, that is, the Tribunal concludes that the adverse information would not “affect” the applicant’s suitability and not that the adverse information is not “relevant” to the applicant’s suitability as nominator. In the Court’s view, there is no apparent inconsistency in finding that adverse information is relevant to suitability but does not affect suitability when all the circumstances are considered as to whether it is reasonable to disregard the adverse information having regard to the other factors in the policy which the Tribunal considered weighed in favour of not disregarding the adverse information.
On that reading, there is no inconsistency between the reasons in [34] and [73] and nor with the Tribunal’s ultimate finding (at [80]) that it was not reasonable to disregard the adverse information.
Accordingly, the Tribunal’s state of satisfaction is not vitiated on either of the ground of illogicality or irrationality or, on a misunderstanding or misapplication of the meaning of adverse information in reg 1.13A.
No jurisdictional error on ground one is established.
Ground 2: legal unreasonableness when considering reg 5.19(4)(b)(ii)
In ground two, the applicant’s complaint is that the Tribunal was legally unreasonable in its consideration of subreg 5.19(4)(b)(ii) in finding that a range of acts were “illegal” without identifying with some particularity the contravened rule of law that made those acts “illegal” and with some acts where the Tribunal was bound to find those acts were not a contravention of a rule of law (AS [33]). Again, it seems that this ground is more properly articulated as a complaint that the Tribunal’s statements as to “illegality” were irrational or illogical; not based on logically probative evidence; and/or were founded upon a misunderstanding of the law.
The applicant identifies that the Tribunal made findings of “illegality” in respect of the following acts:
(a)Paying staff in cash;
(b)Not withholding (or deducting) PAYG tax;
(c)Not paying (or remitting) PAYG tax to the ATO; and
(d)Not paying superannuation for staff.
The applicant asserts that the Tribunal’s numerous references to “illegality”, “illegal activity” and “illegal behaviour” give rise to jurisdictional error on the ground of unreasonableness in circumstances where it is submitted that:
(a)The Tribunal ought to, but did not, identify with particularity in respect to each finding of “illegality” the rule of law said to be disobeyed (AS [43]);
(b)Any finding of illegality should have regard to two principles. First, the Tribunal should show an appreciation of the need not to lightly reach conclusions carrying grave consequences and that the more centrally relevant a particular fact may be to a decision reached, the greater the caution in evaluating the factual foundation for the decision (AS [43]; referring to Sullivan v Civil Aviation Safety Authority (2014) 226 FCR 555 at [19] per Logan J and at [120] per Flick and Perry JJ). Secondly, findings made by a tribunal may have lasting professional, business or personal consequences for the person directly affected (AS [44]; referring to Hansen v Patrick [2019] 3 Qd R 93 at 102 [36]).
The applicant’s submission is to the effect that there was a higher standard of particularity required in respect of a finding of “illegality” where the Tribunal’s findings had grave consequences or lasting professional, business or personal consequences for the applicant and that greater caution was required when evaluating the factual foundation for such a finding. The applicant’s counsel explained in oral submissions that, in those circumstances, the Tribunal’s reasons had to expose the evident and intelligible justification for its findings of “illegality” in relation the applicant’s various actions. This was said to be the case where the Tribunal was making a finding that the applicant contravened a law of the Commonwealth or had acted “illegally” (AS [43]).
The Tribunal was not bound by the rules of evidence (s 33(1)(c) of the Administrative Appeals Tribunal Act 1975 (Cth) which applied at the time). This was said to presuppose and establish a scheme for the Tribunal to inform itself of relevant matters in which the Tribunal, subject to the rules of natural justice, properly may rely on any probative materials relevant to its function (Sullivan v Civil Aviation Safety Authority (2014) 226 FCR (“Sullivan”) at 578 [91] per Flick and Perry JJ, referring to Re Tarrant and Australian Securities and Investments Commission (2013) 62 AAR 192 at [75] per Kerr J and Sen Mem Redfern). That flexibility does not, however, absolve the Tribunal from the obligation to make findings of fact based upon material which is logically probative in which the rules of evidence provide a guide (Sullivan at 580 [97] per Flick and Perry JJ).
In Sullivan, the full court of the Federal Court was concerned with a decision of the Tribunal affirming a decision of the Civil Aviation Safety Authority to cancel the appellant’s helicopter licence consequent upon a crash in which he was the pilot. The issue which arose was whether the Tribunal was, as a general principle, required to apply the Briginshaw standard of proof in circumstances where the facts can be described as serious or grave. In rejecting that submission, Flick and Perry JJ said (at 585, [116]):
What procedure the Tribunal decides to follow in any particular case, and whether the Tribunal decides to either apply or inform itself by reference to the common law rules of evidence, is a matter which has been left by the legislature to the Tribunal itself to determine. The manner in which the Tribunal proceeds cannot, with respect, be pre-determined by any generally expressed “principle of law” which is to be applied to some indeterminate fact findings which may be characterised as “grave” or “serious”.
Their Honours went on to refer to the already accepted means whereby the Court can ensure the Tribunal is not given an untrammelled power to make findings of fact free of all judicial scrutiny and referred to the need for findings to be neither “irrational” nor “illogical” (at 586, [117], citing SZMDS at 649-650).
Then (at 586, [120]) their Honours continued:
Within these already accepted principles, the Tribunal is otherwise free to make findings of fact which cannot be set aside by this Court. When making findings of fact which has “serious” consequences to a party, or “grave” consequences, the Tribunal is free to consider the evidence and other materials before it. The more centrally relevant a particular fact may be to the decision reached, the Tribunal it may be accepted would express greater caution in evaluating the factual foundation for the decision to be reached.
The Court does not understand that passage in Sullivan to be an invitation to conflate the administrative decision-making process with that of the curial process. The administrative decision maker is entitled to rely upon the material it considers appropriate and, subject to the bases already identified in these reasons with respect to the review of subjective jurisdictional fact, is entitled in the exercise of its decisional process to prefer any one or more pieces of evidence over others (Sri Guru at [92] per Derrington J).
The finding of contravention of the PAYG Act as to failure to withhold tax and illegality
Although ground two is directed to the Tribunal’s task with respect to subreg 5.19(4)(b)(ii), the applicant submitted that the Tribunal erred in finding that the applicant contravened a law of the Commonwealth separate to its submission with respect to the alleged inconsistency between [34] and [73] of the Tribunal’s reasons (AS [51]).
The Tribunal’s conclusion (at [34]) that it was not satisfied that subreg 5.19(4)(b)(i) was met was premised on its finding (at [33]) that the applicant had contravened a law of the Commonwealth and that this law was the PAYG Act. The Tribunal referred to s 12-35 of the PAYG Act. The Tribunal did not refer to any other section of the PAYG Act nor to any other law of the Commonwealth.
Section 12-35 of the PAYG Act imposes an obligation to withhold an amount from salary, wages, commissions, bonuses or allowances paid to an individual as an employee. The Tribunal set this out in its reasons (at [30]).
The Tribunal found (at [33]):
The Tribunal finds that the applicant has contravened a law of the Commonwealth namely A New Tax System (Pay as you go) Act 199 No.178 over a period of at least two years from 2017 to 2018 by paying a barista trainer Mr Benmayor in cash and also, according to the agent's submission, a second trainer perhaps for lesser amounts. The applicant did not deduct PAYG withholding tax and did not pay superannuation in respect of these staff. It is unclear whether the two staff would have been covered by Workcover, so the Tribunal is not making a finding with regard to whether Workcover legislation was contravened or not. For clarity no decision is being made as to whether the staff paid in cash were covered or not covered by Workcover.
It is not clear what the Tribunal intended by its finding at [33] by referring to the payment (to a second trainer) of ‘perhaps lesser amounts’. Such a finding would be relevant, for example, to the payment of rates that were under those prescribed by an applicable industrial instrument. Nevertheless, a fair reading of [33] is that the Tribunal is referring to the same conduct as that which it found the applicant engaged in with respect to the other barista (Mr Benmayor), that is, payment in cash and not deducting PAYG withholding tax from those cash payments.
A failure to comply with s 12-35 of the PAYG Act is a contravention within the meaning discussed in Keay where Lucev J (at [17]-[18]) held that the meaning of contravention included a failure to comply with an act (FRS [30]; [32]). A failure to withhold is also an offence attracting a civil penalty pursuant to s 16-25 of the PAYG Act. The Court accepts the first respondent’s submission that a contravention of s 12-35 of the PAYG Act can fairly described as “illegal” having regard to the meaning of contravention in s 2B of the Acts Interpretation Act 1901 (Cth) and the judicial consideration of contravention in Parker v Comptroller-General of Customs (2009) 252 ALR 619 as applied in Bluescope Steel (AIS) Pty Ltd v Australian Workers Union 270 FCR 359 (“Bluescope”) at [15]-[16] per Allsop CJ (FRS [32]; [34]; [36], by reference to those authorities as discussed in Keay at [18]).
The applicant submitted that it is not in dispute that the applicant made cash payments and did not withhold PAYG tax in respect of those payments (AS [36]).
The applicant’s submission is that the Tribunal could not reasonably find that s 12-35 of the PAYG Act was contravened (AS [51]) because for the Tribunal to be satisfied that PAYG tax was not withheld it would have to be satisfied of two things (AS [48]):
(a)that the recipients (of the cash payments) were in fact employees because s 12-35 of the PAYG Act only applies to payments made to an employee; and
(b)that if and only if they were employees, that PAYG tax should have been withheld.
The applicant submitted that the Tribunal’s reasons show no consideration of whether the recipients of the cash payments were employees according to the accepted legal analysis of that question (AS [49] referring to ZG Operation Australia Pty Ltd v Jamsek (2022) 275 CLR 254). The applicant says that the information about Mr Benmayor that was before the Tribunal was that he was a sole trader with his own ABN (CB 575); that his LinkedIn profile referred to him a “Boss Man at Umami Coffee Roaster” in the greater Sydney area (CB 573); and that he had written a book in 2004 titled “Coffee Art” (CB 574). On that information, the applicant submitted that the Tribunal could not reasonably have found that the “staff”, or at least Mr Benmayor, were employees (AS [49]).
The Court agrees there can be no contravention of s 12-35 of the PAYG Act if individuals in respect of whom it is said PAYG tax was not withheld are not employees. The Tribunal’s reasons do not demonstrate that it engaged in the task of examining the terms of the contractual relationship between Mr Benmayor (or, the other barista or staff) and the applicant to determine that the relationship was one of employment. The Tribunal did not make an express finding that Mr Benmayor or the other “staff” (who were paid in cash and respect of which it is admitted that PAYG tax was not withheld) were employees. In finding a contravention of the
PAYG Act (at [33]), the Tribunal proceeded on the premise that Mr Benmayor and the other staff who were the recipients of cash payments were employees.
The Tribunal referred in its reasons to the evidence given by Mr Zhao at the hearing as follows (emphasis added):
(a)Mr Zhao volunteered the information that for at least two years over 2017 and 2018, he had been employing and paying some staff in cash most notably a barista trainer Mr Genario Benmayor ([24]);
(b)Mr Zhao advised that he had paid some staff including a barista trainer in cash for at least the 2017 and 2018 years and had not paid PAYG tax for the staff ([25]);
(c)He employed another barista trainer and other staff, but he paid them in cash for these two years. He claims they requested that they be paid by way of cash, and he was desperate to fill the positions so agreed to this arrangement. One of the employees had another business in Byron Bay and did not want his earnings recorded under MISSMCCOFFEE. He said he didn’t really know about it being illegal under taxation law to pay staff in cash and not deduct PAYG or pay superannuation, but he knows about it now. He employed the other staff for four days per week and the Trainer on Wednesdays and Saturdays ([90]);
(d)The applicant said he did not have any records to substantiate the cash payments made to the staff over those years and it is open to the Tribunal to make a finding that the applicant does not satisfy 5.19(5)(g) on the basis that he was working part of the time as a barista trainer and not full-time as a Marketing Specialist or alternatively give weight to his evidence that he employed some staff including a barrister trainer and paid them in cash ([91]).
The transcript of the Tribunal proceedings was not before the Court. Accordingly, the Court must accept that the reasons for Decision stand as evidence of what was said by the applicant at the hearing (FRS [42] referring to BLD15 v Minister for Immigration and Border Protection (No 2) [2018] FCA 790 at [31] and [32] per Katzmann J).
The Tribunal also made several references in its reasons to the applicant’s agent’s written submission dated 6 March 2024 provided to the Tribunal after the hearing. As to the applicant’s evidence at the hearing that he had been employing and paying some staff in cash notably Mr Benmayor ([24]), the Tribunal said that “these facts were conceded as correct in the letter from the agent 6 March 2024” ([24]). The relevant passages in the applicant’s agent’s letter and to which the Tribunal referred in its reasons are:
(a)The applicant made cash payments to some staff but mainly the barista trainer Mr Benmayor in 2017 and 2018 shortly after he took over the business and that he found it difficult to find a suitable barista and that he was desperate to secure a trainer to save the business [36], [38];
(b)Mr Benmayor was a trained barista and had other sources of income such as published books and his own business [37];
(c)Mr Benmayor insisted on being paid in cash and only occasionally issued receipts [37];
(d)Mr Zhao was unsure if he could claim the expenses and therefore did not report it as expenditure [37];
(e)In hindsight, Mr Zhao acknowledges that he should have questioned Mr Benmayor’s insistence on being paid in cash and at the very least have requested invoices and he could have claimed the payments as expenses to reduce his tax liability [37];
(f)The arrangement was not entered into to take advantage of Mr Benmayor or other staff but was at their request but fully acknowledges the responsibility to put them on the payroll or to request invoices [38];
(g)The incidents occurred nearly six years ago and were isolated to the 2017 and 2018 financial years [40], [46];
(h)The applicant has been compliant with taxation and superannuation obligations since 2018 [40].
It is fair to say that the letter from the applicant’s agent demonstrates that he, like the Tribunal, did not appreciate that it is not unlawful to pay employees in cash. However, the agent did not put to the Tribunal that Mr Benmayor or other staff in respect of whom PAYG tax was not withheld were not employees for the purposes of the PAYG Act. The applicant’s agent’s submission proceeded on the basis that applicant had contravened the PAYG Act in not withholding tax from the cash payments made to Mr Benmayor and other staff who had been paid in cash and was focussed on making a submission as to why it was reasonable for the Tribunal to be satisfied that the adverse information should be disregarded.
Having regard to the evidence of Mr Zhao at the hearing, the statements made by the applicant’s agent in the written submission and that no positive case was made to the Tribunal that Mr Benmayor (and other staff to whom cash payments were made and PAYG tax was not withheld) were not employees, the Tribunal had a logically probative foundation upon which to proceed on the basis that Mr Benmayor and the other “staff” were employees for the purposes of s 12-35 of the PAYG Act.
The applicant further submitted that even if Mr Benmayor or the other trainer and staff were employees, the Tribunal would have to be satisfied that each of the payments was above the threshold for an employer to withhold PAYG tax and that the Tribunal’s reasons show no engagement with this question (AS [49]). The difficulty with this submission is that, as noted above, the written submission from the applicant’s agent proceeds on the basis that the applicant was required to but did not withhold PAYG tax. On that basis, the Tribunal had a logically probative foundation upon which to make a finding that the applicant had contravened s 12-35 of the PAYG Act.
The applicant also submitted that it does not understand that the “allegation” is that such tax was withheld, but then retained by the applicant rather than being paid or remitted to the ATO ([47]). The applicant refers in its submissions (AS [35(b)]) to the Tribunal’s reasons in which the Tribunal said that the applicant did not remit PAYG tax to the ATO (at [52]). The Tribunal did not make any finding as to contravention of s 16-70 of the PAYG Act which deals with the requirement that an entity that withholds an amount must pay the amount to the Commissioner of Taxation in accordance with subdivision 16-B. This does not disclose any vitiating error on the part of the Tribunal. The Tribunal’s decision clearly proceeded on the basis of a conclusion that the applicant had contravened s 12-35 of the PAYG Act.
Accordingly, the Court is of the view that the state of satisfaction with respect to
subreg 5.19(4)(b)(i) is not vitiated by illogicality or irrationality or a misunderstanding of misapplication of the meaning of adverse information pursuant to subreg 1.13A(2)(a).
Statements of illegality with respect to cash payments
The applicant’s complaint as to the Tribunal’s statements as to “illegality” is also addressed to the numerous statements the Tribunal made as to “illegality”, “illegal behaviour” and “illegal activity” which largely followed on from the Tribunal’s unreferenced extract from the ATO’s website (at [54]). Those statements in the Tribunal’s reasons in which the Tribunal uses that terminology are summarised earlier in these reasons.
The statements are largely directed to the applicant paying “staff” in cash. The Tribunal described payment in cash as “illegal”. As already stated, paying employees in cash is not unlawful. However, the Court considers that a fair reading of the Tribunal’s reasons is that it was concerned with the applicant’s contravention of s 12-35 of the PAYG Act by not withholding tax and that it is that finding which led to the conclusion in [33] that it was not satisfied that subreg 5.19(4)(b)(ii) was met. Then in the later paragraphs of its reasons referred to in the applicant’s submissions, the Tribunal was considering whether it was reasonable to disregard the adverse information having regard to the factors in the policy. Again, on a fair reading of the Tribunal’s reasons in those paragraphs, it was linking the practice of payment in cash to the consequence of that practice which was a contravention of the PAYG Act by not withholding tax. In using the term “illegal”, the Tribunal was adopting that expression as used by the ATO (for example, [31] and [54]) in describing the consequences of paying employees in cash with respect to compliance with tax obligations.
In that context, the Court does not find that by referring to the payment of cash as “illegal” the Tribunal was making a finding that the payment in cash was a contravention of a law of the Commonwealth for the purposes of subreg 1.13A(2)(a). Accordingly, the Court is not satisfied that the Tribunal’s state of satisfaction as whether it was reasonable to disregard the adverse information was vitiated by reason of the various statements it made as to “illegality”. The statements were not illogical or irrational or otherwise not supported by logical grounds.
The superannuation issue and illegality
The applicant submitted that it is not in dispute that it did not make superannuation contributions in respect of the persons who were the recipients of the cash payments (AS [36]).
The applicant submitted that central to the Tribunal’s reasoning was its state of mind that not making superannuation contributions was either “illegal”, “illegal activity” or “illegal behaviour” (AS [55]). The applicant submitted that this state of mind could not reasonably have been formed on a materially correct understanding of the law (as to the obligation to make superannuation contributions), and hence was an error (AS [56]). The applicant further submitted that the error was material (AS [57]-[58]). In so submitting, the applicant points to the fact that the Tribunal’s reference in its reasons (at [25] and [52]) to the failure to make superannuation contributions having occurred almost six years before the Tribunal’s decision and there being no evidence of any such failure occurring within, at least, the previous five years it was not reasonable to infer that the acts might have occurred, or might still occur.
Before making its finding (at [34]) that it was not satisfied that subreg 5.19(4)(b)(i) was met, the Tribunal said as follows with respect to superannuation:
(a)The Tribunal put to the applicant under s 359AA of that Act that since he advised that he had paid some staff including a barista trainer in cash for at least the 2017 and 2018 years and not paid PYG tax for the staff nor paid superannuation for them … [25];
(b)Following the adjournment, the applicant said … He had made some mistakes, was sorry and was willing to reimburse for the PAGY and superannuation.[27];
(c)It is clear and the agent advises in the letter of 6 March 2024 that “…Mr Zhao also acknowledges the seriousness of paying unreported cash to employees or contractors as this may also impact on a person’s right to superannuation and being paid an acceptable wage.” [32].
The Tribunal then made its finding at [33]:
The Tribunal finds that the applicant the applicant has contravened a law of the Commonwealth namely A New Tax System (Pay As You Go) Act 199 [sic] No. 178 over a period of at least two years from 2017 to 2018 by paying a barista trainer Mr Benmayor in cash and also, according to the agent’s submission, a second trainer perhaps for lesser amounts. The applicant did not deduct PAYG withholding tax and did not pay superannuation in respect of these staff.
The Tribunal then referred to the failure to make superannuation contributions in the formation of its state of mind as to whether it was reasonable to disregard the adverse information. At [52], the Tribunal said:
…the applicant in this case paid two staff, a barista trainer and another trainer in cash for the 2017 and 2018 years and did not remit PAYG tax to the Australian Tax Office ATO nor did he make superannuation payments on behalf of these employees. This contravened the Australian tax law being A new Tax System (Pay as you go) Act 199 [sic] No. 178.
The Tribunal in [59] and [60] again referred to the issue of superannuation:
Mr Zhou [sic] submitted that he did not know that paying staff cash and reporting it, not withholding PAYG and paying superannuation was wrong at the time although he knows it now. [59]
The Tribunal finds it implausible that Mr Zhao would be aware as a business owner of his obligations to report his own wages, withhold PAYG and pay superannuation on his behalf and not be aware that these obligations extended to other staff in the business. [60]
Had the Tribunal found that a failure to make superannuation contributions was a contravention of a Commonwealth law it would have been in error. It was accepted by the first respondent that a failure to make superannuation contributions is not a contravention of a Commonwealth law (FRS [47]). To be clear, a failure to make superannuation contributions is not a contravention of either the Superannuation Guarantee Charge Act 1992 (Cth) or the Superannuation Guarantee Administration Act 1992 (Cth) as there is no legal obligation to make contributions imposed by either of those Acts (Keay at [23] per Lucev J and Bluescope at [211] and [215]-[219] per Collier J). It was not suggested that there was any evidence before the Tribunal upon which a finding could be made that the failure to make superannuation contributions was a failure to comply with a term of any applicable industrial instrument and thereby a contravention of the Fair Work Act 2009 (Cth) and the Tribunal did not make any such finding.
The Court accepts the first respondent’s submission that on a fair reading of the Tribunal’s reasons it did not make a finding that the failure to make superannuation contributions was a contravention of the PAYG Act. It is clear from the Tribunal’s reasons that it was concerned only with a contravention that Act. The Tribunal set out the terms of s 12-35 in its reasons (at [30]). It could not fairly be said that the Tribunal, despite some looseness of expression in [33] and [52], found that the failure to make superannuation contributions was a contravention of the PAYG Act. The Court agrees with the first respondent’s submission that it is not apparent that the Tribunal’s conclusions at either [33] or [52] as to contravention of the PAYG Act were linked to a failure to make superannuation contributions (FRS [49]-[50]).
In describing the conduct as “illegal”, the Tribunal was relying upon what it fairly understood to be the position of the ATO as to the relationship between the practice of payment in cash and the failure to make superannuation contributions ([54]). In that circumstance and having regard to what is said earlier in these reasons, it was not unreasonable for the Tribunal to describe a failure to make superannuation contributions as “illegal” and in doing so the state of satisfaction the Tribunal was required to reach as to whether it was reasonable to disregard the contravention of the PAYG Act is not vitiated by error.
No jurisdictional error is established on ground two.
If the Court is wrong about that, it agrees with the first respondent’s submission that could the Tribunal be said to have erred in respect of the failure to make superannuation contributions there was not a realistic possibility that the outcome of the decision could have been different (FRS [52], referring to LPDT v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2024) 98 ALJR 610 at [16] per Gageler CJ, Gordon, Edelman, Steward, Gleeson and Jagot JJ). This is because it is clear that the Tribunal’s concern was with the contravention of the PAYG Act and that this was central to the Tribunal’s formation of the statutorily required state of satisfaction.
CONCLUSION
Accordingly, for the reasons given above, the application is dismissed.
I certify that the preceding one hundred and twenty-six (126) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Coulthard. Associate:
Dated: 22 January 2025
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