Tea Story (Australia) Pty Ltd (Migration)

Tea Story (Australia) Pty Ltd (Migration) [2023] AATA 1160 (11 April 2023)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT:   Tea Story (Australia) Pty Ltd
REPRESENTATIVE:  Mrs SanLing Chan (MARN: 9701066)
CASE NUMBER:  2015899
HOME AFFAIRS REFERENCE(S):             OPF2019/13191
MEMBER:P. Maishman
DATE:11 April 2023
PLACE OF DECISION:   Perth
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 11 April 2023 at 4:48pm

CATCHWORDS
MIGRATION – cancellation – sponsorship cancellation –12 months bar – failed to satisfy its reg 2.82 sponsorship obligation to keep records – Ms Wang has been paid the wages as claimed – amounts paid to the sponsored workers are in a form capable of being verified by an independent person – power to take an action under s 140M does not arise – decision under review set aside
LEGISLATION
Migration Act 1958, s 140M
Migration Regulations 1994, rr 2.79, 2.82, 2.86, 2.89

STATEMENT OF DECISION AND REASONS
APPLICATION FOR REVIEW

This is an application for review of a decision made by a delegate of the Minister for Home Affairs to take an action under s 140M of the Migration Act 1958 (Cth) (the Act) in relation to the applicant’s sponsorship.
The applicant was approved as a standard business sponsor on 16 May 2018. On 7 October 2020, the delegate decided to impose a bar preventing the applicant from sponsoring more people under s 140M on the basis that it failed to satisfy its reg 2.82 sponsorship obligation to keep records.
The applicant’s director, Yulin Zhang, appeared before the Tribunal on 24 November 2022 to give evidence and present arguments. The Tribunal also received oral evidence from the sponsored person, Yifan Wang; her husband, Chao Dong; and an accountant Evelyn Lim. The Tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages.
The applicant was represented in relation to the review.
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
The Tribunal had before it a copy of the Departments files. Documents on the Departments file shows Australian Border Force (ABF) commenced monitoring the applicant’s compliance with its sponsorship obligations on 22 October 2019. ABF issued notices of intention to take action (NOITTA) on 29 May 2020 and 21 August 2020.
The applicant gave the Tribunal a copy of the delegate’s decision record with its application for review. The applicant provided written submissions and documents on 22 September 2022, 21 and 23 November 2022, and 1 February 2023.
Background
The applicant trades as Chilli Panda a restaurant in the Perth CBD. The applicant sponsored and has employed Ms Yifan Wang, a subclass 482 visa holder, in the position of cook since 6 August 2018.
On 22 October 2019 the ABF commenced monitoring of the applicant’s compliance with its sponsorship obligations and the Fair Work Ombudsman (FWO) required the applicant to produce documents confirming the sponsored person’s employment records.
On 28 October 2019 the applicant gave the FWO documents including salary confirmation for the fortnight ending 6 October 2019 in the form of a cash receipt and a separate payslip for the same pay period suggesting payment to the nominee’s bank account. The delegate was concerned the year-to-date (YTD) gross amount of $15,319.22 shown on the payslip for the period 6 October 2019 did not correlate to the YTD amount of $2,188.22 recorded on the payslip for 20 October 2019.
ABF wrote to the applicant on 5 February 2020 pursuant to reg 2.83 requesting records including, relevantly, verifiable evidence of the salary and money and benefits paid to Ms Wang in the period 1 November 2019 to 31 January 2020. The applicant produced the requested records on 19 February 2020.
ABF also wrote to a number of Financial Institutions on 5 February 2020 requiring them to produce account records for the applicant and Ms Wang for the period 1 February 2019 to 31 January 2020. ABF received responses to its requests on 7 February 2020 and 18 February 2020.
The delegate was concerned Ms Wang’s bank account statements disclosed no salary payments from the applicant between 2 July 2019 and 24 October 2019 (seven pay periods). The delegate was also concerned Ms Wang held an ABN from 17 October 2018 and noted deposits into her bank account from sources other than the applicant suggested Ms Wang was alternatively employed.
The ABF issued the applicant a notice of intention to take action (NOITTA) on 29 May 2020 identifying possible failures by the applicant to satisfy its sponsor obligations to ensure equivalent terms and conditions of employment (reg 2.79) and to ensure Ms Wang works or participates in the nominated occupation (reg 2.86). The applicant responded on 26 June 2020.
The ABF issued the applicant a further NOITTA on 21 August 2020 identifying possible failure by the applicant to satisfy its sponsor obligation to keep records (reg 2.82). The applicant responded to the NOITTA on 2 September 2020.
Legislation
Sections 140K, 140L and 140M of the Act provide for the imposition of sanctions on approved sponsors in certain circumstances.
Under s 140M, if prescribed circumstances exist, the Minister (and the Tribunal on review) may take one or more of the following actions:
·cancelling the sponsorship approval in relation to a class to which the sponsor belongs;
·cancelling the sponsorship approval for all classes to which the sponsor belongs;
·barring the sponsor for a specified period from sponsoring more people under the terms of any existing approval; and
·barring the sponsor for a specified period from making future applications for sponsorship approval in relation to one or more classes of sponsor.
For these purposes, the circumstances are prescribed in regs 2.89–2.94B and include circumstances in which the Minister, or Tribunal on review, is satisfied there has been:
·a failure to satisfy a sponsorship obligation;
·provision of false or misleading information;
·sponsorship application or variation criteria no longer met;
·a contravention of the law;
·unapproved changes to a program;
·a failure to pay additional security;
·a failure to comply with certain terms of an agreement; or
·a failure to pay medical and hospital expenses.
Where a prescribed circumstance has been found to exist, the regulations prescribe criteria that must be taken into account when determining what action, if any, to take: regs 2.89–2.94B. 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?
Failure to satisfy a sponsorship obligation: reg 2.89
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: reg 2.89(2).
In the present case, the delegate found the applicant failed to satisfy its sponsorship obligation to keep verifiable records of the money it paid Ms Wang (reg 2.82) between 2 July 2019 and 6 October 2019. The delegate says this failure prevented the Department from conducting an assessment of whether Ms Wang had received terms and conditions of employment as approved in their nomination application and not less than would be received by an equivalent Australian worker (a reg 2.79 obligation). The delegate indicated it considered Ms Wang performed a role in a business other than the applicant’s business but in the ‘absence of affirmative evidence’ could not ascertain the applicant failed to ensure Ms Wang participated in the nominated occupation (a reg 2.86 obligation).
The delegate barred the applicant from sponsoring more people under the terms of its approved standard business sponsorship for 12 months until 7 October 2021.
The Tribunal has had regard to the information contained on the Department’s files. The Tribunal has also had regard to documents, information and submissions it received from the applicant on 22 September 2022, 21 and 23 November 2022 and the oral evidence given at hearing.
Obligation to keep records: reg 2.82.
Regulation 2.82 applies to a person who was or is an approved sponsor. It requires the sponsor to keep particular records in a reproducible format and for a particular period.
As it applies in this case, this includes a record of the money paid to the person (reg 2.82(3)(e)(i)). Regulation 2.82(2)(c)(ii) provides that records must be kept in a manner that is capable of being verified by an independent person.
On 22 October 2019 the Fair Work Ombudsman (FWO) required the applicant to produce documents confirming the nominee’s employment records. On 28 October 2019 the applicant gave the FWO documents including salary confirmation for the fortnight ending 6 October 2019 in the form of a cash receipt and a separate payslip for the same pay period suggesting payment to the nominee’s bank account. The delegate is concerned the payslip for the period 6 October 2019 shows a year-to-date (YTD) gross $15,319.22 which contrasts to the YTD amount of $2,188.22 recorded on a later period payslip of 20 October 2019.
ABF wrote to the applicant on 5 February 2020 pursuant to reg 2.83 requesting records including, relevantly, verifiable evidence of the salary and money and benefits paid to Ms Wang in the period 1 November 2019 to 31 January 2020. The applicant produced the requested records on 19 February 2020.
The ABF also wrote to a number of Financial Institutions on 5 February 2020 requiring them to produce account records for the applicant and Ms Wang for the period 1 February 2019 to 31 January 2020. ABF received responses to its requests on 7 February 2020 and 18 February 2020.
The ABF issued the applicant a notice of intention to take action (NOITTA) on 29 May 2020 identifying information obtained from the banks suggested Ms Wang had not received salary payments in the period between 1 July 2019 and 25 October 2019.
The applicant responded to the notice on 26 June 2020. Relevantly, Mr Zhang and Ms Wang provided statutory declarations dated 26 June 2020 confirming Ms Wang received cash payments in the pay periods 1 July 2019 to 6 October 2019. The applicant provided an Excel spreadsheet on which the wages paid to Ms Wang were reproduced. The applicant gave the Department a copy of Ms Wang’s ATO income statement for a 2019/20 financial year.
The ABF issued the applicant a further NOITTA on 21 August 2020 identifying possible failure by the applicant to satisfy its sponsor obligation to keep records (reg 2.82). In response the applicant gave the Department letters confirming it deposited superannuation payments to Westpac bank; and accountants letter confirming it paid cash salary payments; and a copy of its BAS statements for the period January 2019 to June 2020.
Mr Zhang does not dispute the applicant commenced making cash payments to Ms Wang, in the first quarter of the 2019 financial year. Mr Zhang agreed that prior to the first quarter of the 2019 financial year he had been paying his staff by electronic funds transfer. His accountant told him to start cash payments because he had problems understanding and implementing single touch payroll (STP) software introduced by the Australian Taxation Office (ATO) from the 1 July 2019. Mr Zhang submits it kept critical verifiable records of the payments made to Ms Wang in the form of its BAS activity statements, payroll tax records, and superannuation amounts.
Mrs Evelyn Lim states she is a qualified accountant and worked as a Chief Financial Officer and consultant for small businesses. Mrs Lim noticed a lot of small businesses had difficulty with the ATO implementation of the STP system. Mrs Lim agreed she had never been the applicant’s accountant. The Tribunal noted the ATO claimed the STP system had 120,000 successful users when it was due to be implemented. Mrs Lim opined that those users were perhaps big businesses and that small businesses were fearful of real-time reporting in case they made a mistake. The Tribunal prefers the publicly available ATO information that the system was successful to the anecdotal evidence of Mrs Lim.
The Tribunal notes that the Department’s policy position[1] is that cash payments are generally not capable of being verified by an independent person. As such sponsors are strongly encouraged to use salary payment methods which clearly meet the requirements of reg 2.82, such as electronic funds transfers.
[1] Department of Home Affairs; >
However, the Tribunal notes that the applicant provided the Department with Ms Wangs annual Income Statement for the 2020 financial year which was generated on 12 July 2020. This information is verification to the ATO that Ms Wang has been paid the wages as claimed, together with their respective entitlements, and paid the tax reported. In addition, the applicant provided records of superannuation contributions. There is no evidence that the applicant has failed to the pay sponsored workers superannuation entitlements and taxation in accordance with the wages in which they have received. Based on the documents provided by the applicant the Tribunal is satisfied that the payments made to the sponsored worker in cash including their PAYG tax and superannuation entitlements were paid by the applicant. Based on the documents provided the Tribunal is satisfied that the payments can be independently verified by comparing the applicant’s records with those provided ATO Assessment and Income Statement.
As such, the Tribunal considers that based on the records supplied by the applicant the amounts paid to the sponsored workers they are in a form capable of being verified by an independent person in accordance with reg 2.83 of the Act.
Accordingly, the Tribunal is not satisfied the applicant failed to meet its reg 2.82 obligation.
Obligation to ensure equivalent terms and conditions of employment: reg 2.79.
Relevantly to this matter, the applicant has an obligation to ensure its nominee is employed on equivalent terms and conditions that would be provided to an Australian citizen or permanent resident (reg 2.79).
Ms Wang has received her wages and salary in accordance with the terms and conditions of her employment. There is no evidence before the Tribunal that Ms Wang has not been employed on equivalent terms and conditions that would be provided to an Australian citizen or permanent resident.
The Tribunal is not satisfied the applicant has failed to meet its reg 2.79 obligation.
Obligation to ensure primary sponsored person works or participates in nominated occupation, program or activity: reg 2.86.
Regulation 2.86(2)(a) of the Act requires a sponsor to ensure that the primary sponsored person works in the nominated occupation.
The delegate was concerned the takings from Mr Dong’s business were transferred to and held in the account of Mrs Wang. The Tribunal noted Ms Wangs individual bank account indicated purchases of paint supplies on dates and at times Ms Wang is recorded on timesheets as working for the applicant.
Ms Wang and Mr Dong gave independent evidence about the use of Ms Wangs account. Their description of the use of the account was unrehearsed, consistent and credible. The parties independently explain Mr Dong works as a painter. Mr Dong has his own card with which he accesses his wives account if he needs. He also transfers money to her account as a way of saving or paying for general household expenses. He purchases painting supplies and has used his wife’s account to do so on occasion. Neither of the parties pays much attention to whose money is being used as they are a family and share their financial resources.
Mrs Wang denied she is involved with her husband’s business in any substantial way. She is busy with her own employment with the applicant and otherwise looking after her and her husband’s four-year-old child.
There is no evidence before the Tribunal that Mrs Wang works or participates in any other occupation than that for which she is nominated.
The Tribunal was not satisfied the applicant has failed to meet its reg 2.86 obligation.
Accordingly, the Tribunal is not satisfied that the prescribed circumstance in reg 2.89 exists for the purpose of s 140M of the Act.
Action to be taken
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
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.
P. Maishman
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.
…

[2023] AATA 1160

11 April 2023

Key Legal Topics

Areas of Law

Immigration

Administrative Law

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction

Remedies

Jurisdiction