Smiling Buddha Vegetarian Restaurant Pty Ltd (Migration)

[2019] AATA 3930

Smiling Buddha Vegetarian Restaurant Pty Ltd (Migration) [2019] AATA 3930 (21 June 2019)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Smiling Buddha Vegetarian Restaurant Pty Ltd

CASE NUMBER:  1605983

DIBP REFERENCE(S):  OPD2106/48656

MEMBER:Mary Sheargold

DATE:21 June 2019

PLACE OF DECISION:  Melbourne

DECISION:The Tribunal sets aside the decision under review and substitutes a decision not to take one or more of the actions specified in s.140M of the Migration Act 1958.

Statement made on 21 June 2019 at 10:30am

CATCHWORDS
MIGRATION – cancellation – standard business sponsor – sponsorship obligations – financial records – evidence of employee payment records provided – wages paid in cash – cash wage payments legally permissible – changed approach to payment of wages to electronic funds transfer – genuine intent to comply with legal obligations – issues with migration agent – credible witness – decision under review set aside

LEGISLATION
Fair Work Act 2009 (Cth), ss 323, 536
Migration Act 1958 (Cth), ss 140, 359, 375A
Migration Regulations 1994(Cth), rr 2.82, 2.89

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

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

2. The applicant was approved as a standard business sponsor on 12 September 2012. On 18 April 2016, the delegate decided to bar the applicant for 24 months form making future applications for approval as a standard business sponsor under s.140M(2) of the Act on the basis that the applicant failed to satisfy a sponsorship obligation under r.2.89 of the Migration Regulations 1994 (the Regulations).  Specifically, the applicant was found to have breached its obligations under r.2.82 to keep records of monies paid to Ms Yan Liu that are capable of being verified by an independent person.  The Tribunal notes that this breach occurred because the applicant paid Ms Liu’s wages to her in cash, and did not keep records of monies paid to Ms Liu from 28 February 2013 to October 2015.

3. The Notice of Decision dated 18 April 2016 also discusses a possible breach of r.2.86, the obligation to ensure the primary sponsored person (Ms Yan Liu) works or participates in her nominated occupation, program or activity.  The Tribunal notes that no action was taken by Australian Border Force (ABF) on this point because the delegate was satisfied that the applicant had provided sufficient evidence to demonstrate that Ms Liu did in fact work in her nominated occupation.  Therefore, the Tribunal has not considered this issue in its findings or decision.

4. Mr Guo Jian Chen, a director of Smiling Buddha Vegetarian Restaurant Pty Ltd (the applicant), appeared before the Tribunal on 7 June 2019 to give evidence and present arguments. The Tribunal also received oral evidence from Ms Yan Liu.  The Tribunal hearing was conducted with the assistance of an interpreter in the Cantonese, Mandarin, and English languages.

5. The applicant was represented in relation to the review by its registered migration agent. The representative attended the Tribunal hearing.

   Non-disclosure certificate issued pursuant to s.375A of the Act

6. On 1 May 2019, the Tribunal wrote to the applicant stating that a delegate of the Minister had issued a non-disclosure certificate in relation to folios 12-17 and 73-78 of the Departmental file on the basis that disclosure of that information “would be contrary to public interest” because they contain “documents that would disclose lawful methods for preventing, detecting and investigating breaches or evasions of law which would or be likely to prejudice the effectiveness of those methods.”

7. In its letter, the Tribunal noted that it considered that the certificate is partly valid.  Specifically, the Tribunal considered there to be a valid public interest reason in relation to folios 73-78 containing lawful methods for preventing, detecting and investigating breaches or evasions of law.  Further, the letter noted that the Tribunal considered that the recommendation report at folios 73-78 to be relevant to the review, and noted that it did not consider the information in folios 12-17 to be relevant to the review.

8. The applicant was invited to comment on the validity of the non-disclosure certificate by written submissions to the Tribunal to be received by 15 May 2019.  The Tribunal did not receive any submissions or comments from the applicant regarding the validity of the non-disclosure certificate.  At the hearing, the Tribunal asked Mr Chen whether he wished to make any submissions in relation to the validity of the non-disclosure certificate.  He stated that, other than to refute any allegations of wrongdoing by him that may be contained in the documents, he did not wish to make any submissions.  The applicant’s representative also declined the Tribunal’s invitation to make comments on the validity of the non-disclosure certificate.  As such, the Tribunal finds the non-disclosure certificate to be partly valid as set out in its letter to the applicant dated 1 May 2019.

9. The Tribunal observes that the relevant information protected by the non-disclosure certificate was put to the applicant in its letter dated 1 May 2019 pursuant to s.359A of the Act.  The Tribunal notes the applicant responded to the invitation to comment on or respond to that information by submissions made to the Tribunal on 14 May 2019, and these submissions have been drawn on by the Tribunal as required to assist the Tribunal in making its findings set out below.

10. For the following reasons, the Tribunal has decided to set aside the decision under review and substitute a decision not to take one or more of the actions specified in s.140M.

    CONSIDERATION OF CLAIMS AND EVIDENCE

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

12. Under s.140M, if prescribed circumstances exist, the Minister (and the tribunal on review) may take one or more of the following actions:

    ·cancelling the sponsorship approval in relation to a class to which the sponsor belongs;

    ·cancelling the sponsorship approval for all classes to which the sponsor belongs;

    ·barring the sponsor for a specified period from sponsoring more people under the terms of any existing approval; and

    ·barring the sponsor for a specified period from making future applications for sponsorship approval in relation to one or more classes of sponsor.

13. For these purposes, the circumstances are prescribed in r.2.89 - r.2.94B and include circumstances in which the Minister, or Tribunal on review, is satisfied there has been: a failure to satisfy a sponsorship obligation; provision of false or misleading information; sponsorship application or variation criteria no longer met; a contravention of the law; unapproved changes to a program; a failure to pay additional security; a failure to comply with certain terms of an agreement; or a failure to pay medical and hospital expenses.

14. Where a prescribed circumstance has been found to exist, the regulations prescribe criteria that must be taken into account when determining what action, if any, to take: r.2.89 – r.2.94B. These criteria, as they relevantly apply to the circumstances of this case are set out in the attachment to this decision.

    Does a circumstance for the taking of an action exist?

15. In the present case, the delegate found that the applicant had failed to satisfy a sponsorship obligation as required under r.2.89 of the Regulations.

    Failure to satisfy a sponsorship obligation: r.2.89

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

17. At the hearing, Mr Chen did not deny that, prior to his business being monitored by ABF in September 2015, he ordinarily paid cash wages to his staff.  He stated that this was because his restaurant was a cash business and he preferred to manage the payments in cash.  Both Mr Chen and his representative stated that it is not illegal to pay staff in cash.  Mr Chen stated that from the time ABF commenced monitoring his business in September 2015, he had started paying Ms Liu’s salary by bank cheque.  This is consistent with the delegate’s findings in the Notice of Decision.  Mr Chen gave evidence that he now routinely pays staff, including Ms Liu, by electronic funds transfer.  Ms Liu confirmed that she now receives salary payments by electronic funds transfer.  The Tribunal accepts that the applicant has ceased using cash for the payment of wages to Ms Liu since it was first notified of the Department’s preference for wages to be paid by another means.

18. However, Mr Chen refuted the allegation that the applicant had failed to keep records of wage payments made to its staff.  Mr Chen told the Tribunal that each week, he notifies his accountant of the hours worked by each staff member, and that the accountant advises him the amount of cash he is required to pay each employee.  Mr Chen told the Tribunal that his accountant prepares a payslip for each employee each week, that the accountant retains these payslips, and that they are distributed to the employees once every three months.  The Tribunal noted that this was an unorthodox practice and that the applicant had an obligation at law to provide its employees with payslips at the time payments were made.  Mr Chen noted that his employees requested not to receive their payslips each week as they did not need them for any purpose.  Ms Liu confirmed that this was correct.

19. The Tribunal accepts Mr Chen’s evidence that despite paying his staff their net wages in cash, the appropriate tax has always been withheld and paid to the Australian Taxation Office on behalf of the applicant’s employees, that superannuation has been paid for the applicant’s employees, and that employees always receive PAYG statements in the required timeframe at the end of each financial year.  Relevantly, in response to the Tribunal’s invitation to comment on or respond to information provided pursuant to s.359A of the Act (as discussed above), the Tribunal notes the applicant has provided the Tribunal with copies of Ms Liu’s payslips, Ms Liu’s bank statements showing deposits of cash and cheques, evidence of payment of superannuation for Ms Liu, PAYG summaries, and her notices of assessment from the Australian Taxation Office verifying that Ms Liu has been paid appropriately and has paid appropriate income tax on her earnings.

20. Further, Mr Chen stated that he fully relied on his previous migration agent for all advice as to how to comply with his sponsorship obligations, as he is unable to speak or read English.  Mr Chen stated that when he received information from ABF regarding sponsorship obligations in the past, he gave these to his migration agent and requested that the agent relay the necessary information back to him.  Mr Chen stated that at no time was he told he was not able to pay his staff cash wages.

21. The Tribunal found Mr Chen to be very forthright and frank in his evidence, and found him to be a credible witness.  The Tribunal accepts that Mr Chen did not appreciate the nature of all of his sponsorship obligations because he had depended upon his advisor to keep him apprised of relevant information, and that the agent had not done so.  Mr Chen has demonstrated to the Tribunal his genuine intent to comply with his legal obligations in the conduct of his business and has shown he has changed his approach to the payment of wages.  The Tribunal notes that the applicant no longer engages the services of that migration agent.

22. The Tribunal notes that r.2.82(2)(c) applies to standard business sponsors, and requires that the sponsor keep a record of money paid to the primary sponsored person per r.2.82(3)(e)(i) (in this case, Ms Liu), and that such records must be maintained in a manner capable of being verified by an independent person.  The Tribunal notes that the meaning of “capable of being verified by an independent person” is not set out in either the Act or the Regulations.

23. Further, the Tribunal notes that r.2.82(3)(e)(i) only requires a sponsor to keep a record of the money paid to the primary sponsored person.  Nowhere in r.2.82 is it prescribed that monies paid must be paid by electronic funds transfer.  While the Tribunal notes the Departmental policy (set out in the Procedures Advice Manual 3) states that “the ABF’s position is that cash payments are generally not capable of being verified by an independent person,” and that “sponsors are strongly encouraged to use salary payments which clearly meet the requirements of regulation 2.82,” “strong encouragement” does not oblige the sponsor to use electronic funds transfer to pay the primary sponsored person.

24. The Tribunal observes that a requirement to pay overseas workers by electronic funds transfer would be inconsistent with an employer’s obligations set out in the Fair Work Act 2009 (Cth) (Fair Work Act): s.323(2)(a) of that Act prescribes cash as a permissible method for the payment of wages. The Tribunal finds that paying an overseas worker in cash does not in itself breach r.2.82. The Tribunal notes that the Department’s policy is in conflict both with the obligations in r.2.82 and in s.323(2)(a) of the Fair Work Act, and as such, the Tribunal will not apply the Department’s policy in this case: to do so would be imposing obligations in excess of those set out at law.

25. In the circumstances of this case, the Tribunal notes that in the Notice of Decision, the delegate was especially concerned that the applicant had not provided evidence of records of monies paid to Ms Liu for the period 28 February 2013 to October 2015.  The delegate states: “The sponsor has failed to keep records on one occasion.  Specifically, the sponsor failed to keep a record of monies paid to Yan Liu from 28 February 2013 to October 2015.”  However, the Tribunal notes that on 28 September 2015, the delegate had written to the applicant and requested records and/or information under r.2.83.  On 10 October 2015, the applicant provided evidence that it had paid Ms Liu in cash from 28 February 2013 by supplying the delegate with copies of her payslips and PAYG statements. 

26. In the NOITTA, the delegate noted that there were anomalies in the payslips indicating they may not have been produced at the time Ms Liu was paid, and in any case, the delegate did not accept that the records kept by the applicant were capable of being verified by an independent person.  The Tribunal has considered the payslips submitted to the Department in response to the request made on 28 September 2015 and notes that, consistent with Mr Chen’s evidence that payslips were actually provided to the applicant’s employees quarterly rather than weekly, each payslip clearly sets out the relevant pay cycle for Ms Liu and states the payslip was produced at the end of each quarter of the financial year (e.g. produced on 30 September, 31 December, 31 March and 30 June each year).

27. While the Tribunal notes that the applicant may have failed in its obligations under s.536 of the Fair Work Act to provide its employees with their payslips within one business day of making salary payments each week, it has demonstrated to ABF that it has kept records of the monies paid to Ms Liu.  Further, the Tribunal notes that the applicant’s accountant has prepared and maintained the payslips for the applicant’s business.  The accountant is independent of the applicant’s business.  The Tribunal affords weight to the supporting letter provided by the applicant’s accountant dated 9 May 2019.  That letter states that the applicant has been registered since 1986 and that it has complied and conformed to all statutory requirements in Australia, and that the accountant prepares all payslips before cash payments were made to staff, and states that the applicant has employed a new salary payment policy since September 2015 “to ensure the cash payment will not occur anymore”.

28. While the Tribunal understands the Department’s policy intention behind “strongly encouraging” employers to utilise electronic funds transfer as a payment method that is capable of being verified by an independent person, the Tribunal observes that such payment methods could still be exploited by employers.  In circumstances where the applicant has clearly demonstrated to ABF that it has consistently kept records of monies paid to Ms Liu, both via her payslips and PAYG statements, as well as evidence before the Tribunal including Ms Liu’s bank statements, notices of assessment from the ATO, and the applicant’s quarterly Business Activity Statements (BAS) and detailed financial statements that record details of salary payments made to its staff, the Tribunal finds the applicant has substantially complied with its obligations set out in r.2.82.

29. Accordingly, the Tribunal is not satisfied that the prescribed circumstance in r.2.89 exists for the purpose of s.140M of the Act.

    Action to be taken

30. As the Tribunal finds that none of the circumstances for s.140L(1)(a) exist, it follows that the power to take an action under s.140M does not arise.

    DECISION

31. The Tribunal sets aside the decision under review and substitutes a decision not to take one or more of the actions specified in s.140M of the Migration Act 1958.

    Mary Sheargold
    Member

    
    

    ATTACHMENT – Extract from the Migration Regulations 1994

    2.89   Failure to satisfy sponsorship obligation

    …

    (3)      For paragraph 140L(1)(b) of the Act, the criteria that the Minister must take into account in determining what action (if any) to take under section 140M of the Act in relation to the circumstance mentioned in subregulation (2) are:

    (a)     the past and present conduct of the person in relation to Immigration; and
    (b)    the number of occasions on which the person has failed to satisfy the sponsorship obligation; and

    (c)     the nature and severity of the circumstances relating to the failure to satisfy the sponsorship obligation, including the period of time over which the failure has occurred; and

    (d)    the period of time over which the person has been an approved sponsor; and

    (e)     whether, and the extent to which, the failure to satisfy the sponsorship obligation has had a direct or indirect impact on another person; and

    (f)     whether, and the extent to which, the failure to satisfy the sponsorship obligation was intentional, reckless or inadvertent; and

    (g)    whether, and the extent to which, the person has cooperated with Immigration, including whether the person informed Immigration of the failure; and

    (h)    the steps (if any) the person has taken to rectify the failure to satisfy the sponsorship obligation, including whether the steps were taken at the request of Immigration or otherwise; and

    (i)    the processes (if any) the person has implemented to ensure future compliance with the sponsorship obligation; and

    (j)    the number of other sponsorship obligations that the person has failed to satisfy, and the number of occasions on which the person has failed to satisfy other sponsorship obligations; and

    (k)     any other relevant factors.

    …