Woods (No. 1) and Migration Agents Registration Authority
[2004] AATA 457
•11 May 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 457
ADMINISTRATIVE APPEALS TRIBUNAL )
) No V02/724
GENERAL ADMINISTRATIVE DIVISION ) Re JAMES MALCOLM WOODS (No. 1) Applicant
And
MIGRATION AGENTS REGISTRATION AUTHORITY
Respondent
DECISION
Tribunal Mr J Handley, Senior Member
Associate Professor J.H. Maynard, MemberDate11 May 2004
PlaceMelbourne
Decision 1. The decision under review in so far as it was decided that an individual related by employment to the applicant was not a person of integrity within s303(g) of the Migration Act 1958 (“the Act”), is set aside and in substitution it is decided that relevant persons were not related by employment.
2. The remaining parts of the decision namely
(i) the applicant was not a person of integrity or was not a fit and proper person to give immigration assistance within s303(f) of the Act; and
(ii) the applicant had not complied with the Code of Conduct prescribed under s314(1) of the Act; and
(iii) to cancel the registration of the applicant as a registered migration agent by removing his name from the Register
are affirmed.
(Sgd) J Handley
Senior Member
MIGRATION AGENTS – applicant is a legal practitioner and migration agent – practicing certificate as a lawyer cancelled for eight years – registration as a migration agent cancelled by respondent – findings by MARA that he is not a person of integrity and not a fit and proper person to give immigration assistance – failure to comply with Code of Conduct – decisions affirmed
Migration Act 1958 (Cth) s303, s290(1) and s290(2), s276(1), s278, s314, s306
Migration Agents Regulations – Code of Conduct
Plaintiff S157/2002v The Commonwealth of Australia [2003] HCA 2
Australian Broadcasting Tribunal v Bond and Others (1990) 94 ALR 11
Cunliffe v The Commonwealth (1994) 182 CLR 272
Hughes and Vale Pty Ltd and Another v State of New South Wales and Others (No 2) (1955) 93 CLR 127
Re Control Customs Pty Limited and Chief Executive Officer of Customs [2001] AATA 284
Re SRH and Comptroller-General of Customs (1995) 21 AAR 401
Re Letts and Secretary to the Department of Social Security (1984) 7 ALD 1
Re Lachmaiya and Department of Immigration and Ethnic Affairs (1994) 90 AAR 148
Re Peng and Department of Immigration and Multicultural Affairs (AAT 12543 19 January 1998)
Allinson v General Council of Medical Education and Registration (1994) 1 QB 751
Lilienthal v Migration Agents Registration Authority (2002) 34 AAR 371
Pillai v Messiter (1989) 16 NSWLR 197
Australian Securities Commission v Kippe (1996) 137 ALR 423 at 431
Re De Vere and Migration Agents Registration Board [1998] AATA 767
Re Griffiths and Migration Agents Registration Authority [2002] AATA 247
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Chan v Zacharia (1984) 154 CLR 178REASONS FOR DECISION
11 May 2004 Mr J Handley, Senior Member
Associate Professor J.H. Maynard, Member1. Mr Woods applies to review a number of decisions made by the Migration Agents’ Registration Authority (“MARA”) on 28 June 2002. The hearing of this review occurred between 5 and 12 May 2003. When it concluded we commenced to hear another application for review of decisions made by MARA in other proceedings brought by Mr Woods. That review bears the Tribunal file number V 2003/165. In order to distinguish the decisions which we will simultaneously deliver in both applications, the present application is described as “No. 1” and the other application is described as “No. 2”.
2. Prior to 25 June 2002 Mr Woods held a certificate to practice as a barrister and solicitor of the Supreme Court of Victoria. On 25 June 2002 the Legal Practice Tribunal of Victoria (“the LPT”) cancelled Mr Wood’s practising certificate and prohibited him from applying for a practising certificate for eight years. MARA relied upon the evidence given before the LPT over a 17 day hearing and its reasons for decision are the basis for the decisions it made on 28 June 2002 namely:
(a)It was satisfied that Mr Woods was not a person of integrity, or was otherwise not a fit or proper person to give immigration assistance within s 303(f) of the Migration Act 1958 (“the Act”); and
(b)It was satisfied that an individual related by employment to Mr Woods was not a person of integrity within s 303(g) of the Act; and
(c)It was satisfied that Mr Woods had not complied with the Code of Conduct prescribed under s 314(1) of the Act, as in force from time-to-time; and
(d)Under the exercise of powers given to it by s 303(a) of the Act MARA cancelled the registration of Mr Woods by removing his name from the register, kept by MARA, under s 287(1).
3. In making the decisions which are under review by these proceedings, MARA relied on the evidence before and the findings of the LPT, which are summarised at pages 5-25 of the T documents. The LPT heard a number of charges referred by the Legal Ombudsman upon complaints made by persons Zhai Fu Shun (“Zhai”) and Chang Lai Chang (“Chang”). At this stage we briefly summarise, as follows, the circumstances relied upon by MARA as the basis for its decisions.
THE FACTS
4. On 26 August 1998 Li Li Fang (“Li”) acting on behalf of Zhai approached Allan Huang (“Huang”) a person either employed by Law Partners or otherwise engaged by Law Partners. Huang was approached to assist in a Business Visa Application sought by Zhai. Zhai was then a resident of China but he held a sub-class 456 visa in Australia and had invested in a Chinese restaurant operating in Carlton. Apparently by reason of his investment in that restaurant he had sought a sub-class 457 visa which had been rejected but over which an appeal had been lodged by another migration agent Cheng Wang (“Wang”). Huang apparently advised Li that Wang was not a lawyer and could not conduct appeals in the Federal Court. Huang also advised Li that Mr Woods was a qualified lawyer and specialist migration agent who could act in an appeal to the Federal Court. He also advised that Law Partners were an influential firm and that the Department of Immigration and Multicultural Affairs (“DIMA”) was influenced by Law Partners which also had connections within DIMA. Huang then advised Li that if Zhai instructed Law Partners to conduct his application for a sub-class 457 business visa that the current appeal would be “repackaged”, which needed to be conducted quickly and before a decision was made on the appeal which had been lodged by Wang. Law Partners is an incorporated legal practice of which Mr Woods held 97% of the shares and Mr Geary, held 3%.
5. Fees were apparently discussed in the event that Mr Woods or Law Partners were instructed to act, with further advice being given that the fees would be refunded in the event that the application was unsuccessful. Huang prepared documentation on Law Partners letterhead, being instructions for Law Partners to act on behalf of Zhai. Li signed the document in the name of Zhai, upon instruction from Huang. Li paid $1500 to Huang who also wrote a letter on 26 August 1998, on Law Partners letterhead in effect advising that the appeal to be undertaken on behalf of Zhai would be “handled principally” by him, under the supervision of Mr Woods, who was described as an accredited specialist in immigration law. Enquiries were to be directed to Huang who would “involve Mr Woods if necessary”.
6. On the following day, 27 August 1998, Huang advised Li that having made enquires from DIMA obtaining further documentation was necessary and a company needed to be registered. On 28 August 1998 Law Partners incorporated the firm Hua Fu Enterprises (Australia) Pty Ltd (“Hua Fu”) which allocated shares of 37.5 per cent to Zhai, 37.5 per cent to Chang and 25 per cent to Law Partners Investments (Far East) Pty Ltd. It was decided that Hua Fu would be a joint venture between Zhai and Law Partners, with Zhai’s interest being 75 per cent and Law Partners having an interest of 25 per cent. The documented Minutes of a meeting of Directors and Shareholders of Hua Fu dated 27 August 1998 record that Mr Woods, Zhai and Huang were present. In fact Zhai was then residing in China and Mr Woods was not present at the meeting. The Minutes also recorded that Zhai and Huang were appointed as Directors and Li signed Zhai’s name, certifying the Minutes as correct. Li also signed the Memorandum of Association in the name of Zhai also at the direction of Huang.
7. On 28 August 1998 Li opened an account at the National Australia Bank (“NAB”) in the name of Hua Fu at the request of Huang. She signed the account in the name of Zhai but when the NAB refused to open the account, Li requested and Zhai agreed to grant her a Power of Attorney which he forwarded by facsimile on the same day. The persons authorised to operate that account were Mr Woods, Zhai and Huang.
8. On 31 August 1998 Huang met with Li and advised her that it was necessary in order to satisfy the sub-class 457 business visa application that $100,000 should be deposited into the Hua Fu bank account. Li met Mr Woods on that day but she could not recall the advice that she had been given. At no time prior to 31 August 1998 had Li or Zhai been given any legal advice by any person at Law Partners.
9. In early September 1998 monies were paid by Li to Huang and Law Partners, being the cost of registration and incorporation of Hua Fu. On 7 September 1998 a “Business Commencement and Management Retainer” document was prepared by Huang on Law Partners letterhead. It was addressed to Zhai and forwarded to the residential address in Melbourne of Li. Law Partners was retained as the legal representative to assist Zhai in finding, commencing and managing a business in order to allow him to make a visa application to reside temporary or permanently in Australia. The document proposed that Law Partners would have a 25 per cent share holding in any business acquired which would also be managed by Law Partners at a fee. At the date of the delivery of this document to Li (on behalf of Zhai) neither Mr Woods nor any other person at Law Partners had advised Li or Zhai that they should obtain independent legal advice. The retainer document did record that the clients should seek independent legal advice and the potential of a conflict of interest was referred to, however Li had a poor command of the English language, that a Chinese translation of the document was not provided, that Li did not understand the document and that Zhai did not speak or read any English and he continued to reside in China. Additionally it was suggested that at no time did Mr Woods or any other person at Law Partners explain the document or its content or meaning to Li on behalf of Zhai.
10. Li returned to China on 8 September 1998 with the reminder by Huang that she should arrange to have Zhai transfer $100,000 into the bank account as soon as possible. In anticipation that Zhai would be travelling to Melbourne, it was discussed that the sub-class 457 visa application would be made upon his arrival but the monies as referred to above would need to have been deposited.
11. At 16 October 1998 the sum of $97,584.85 had been deposited into the Hua Fu bank account. Zhai arrived in Melbourne on 31 October 1998. He and Li attended the Law Partners office on 2 November 1998 where he for the first time met Huang and a person named Wu who was introduced as an assistant to Huang.
12. It was then suggested that the monies held in the Hua Fu account would not of itself satisfy DIMA and that Zhai should immediately acquire a business. Discussions were held with Zhai about the potential of purchasing a newsagency and a business which sold and rented mobile telephones. Mr Woods was present at that meeting but neither he nor Huang gave any advice to Li or Zhai about a potential for conflict of interest or the desirability of seeking independent legal advice.
13. On 4 November 1998 Zhai and Li indicated that they were not interested in acquiring a newsagency or the mobile telephone business. Huang then advised Zhai and Li that he knew of a restaurant located near the Stock Exchange in Melbourne (“City Paragon Café”). Huang advised that he knew the owners of the restaurant and had learnt that it had been in operation for approximately three years, its average weekly takings were $9000, that its turnover in the preceding year had been $400,000 and it had made a profit of $170,000. Huang advised that it was opened between Monday and Friday only for breakfast and lunch but a liquor licence could be obtained and the restaurant could be open for seven days per week as well as for evening meals. Huang advised that the price of the restaurant was $250,000 and the price was not negotiable.
14. On 5 November 1998 Zhai and Li met with Huang in his office at the Law Partners practice. Huang introduced them to Chang who was described as Zhai’s partner. Present at the meeting were Huang, Wu, the vendors of the Café, Chang, Zhai and Li. Zhai and Li had attended Huang’s office at the request of Wu. Huang eventually notified Zhai and Li that the purpose of the meeting was to sign the contract for the purchase of the Café. He advised that on signing the contract and payment of $180,000 as deposit, the business would be handed over on the following day. He also advised that the balance of the purchase price of $70,000 could be the subject of a loan over which the business would be offered as security. Huang then advised that once the business had been acquired the sub-class 457 visa application could proceed. Zhai signed the contract. Chang also signed the contract. There was then some discussion with the vendors who said that they wished to speak to their solicitors before they signed the contract. The vendors made a telephone call in the absence of Zhai, Li and Chang. Upon being invited to the office at the conclusion of the telephone call they were advised by Huang that the vendors had said (to him) that only upon payment of the purchase price in full would the business be handed over. An amended contract was then produced indicating that only upon the payment of $250,000 would the business be transferred. Zhai and Chang were then asked to sign the amended contract which they did. The contract had been prepared by Huang. It did not refer to any solicitors or other representatives on the part of the vendors. Neither Mr Woods, Mr Geary or any other solicitor in the employ of Law Partners attended this meeting.
15. After the amended contract was signed, Huang asked Li to sign two blank cheques on the account of Hua Fu which she did. The cheque butts indicated that a cheque of $75,000 and another cheque of $15,000 had been drawn. Enquiries later made indicated that the cheque of $15,000 had been made payable to cash which had been collected by Huang. The other cheque of $75,000 (Vol 2 p154) had been made payable to the vendors of the Café.
16. Li and Zhai later learnt that the person Webber Chang was the person to whom they had been introduced and who signed the contract as the person Chang. Webber Chang and Chang Lai Chang apparently are brothers. The false identity of this person was apparently known to Huang but not to Zhai or Li.
17. On 9 November 1998 Zhai and Li attended the Café but, apparently disappointed at what they had observed, immediately attended the Law Partners office. It was alleged that Mr Woods had refused to see them despite their request. Li and Zhai spoke with Wu and notified him that they wished to be released from the contract. Wu then introduced Zhai and Li to Mr Geary who advised (with Wu interpreting) that despite a “three day cooling off period” clause within the contract they could not be released from it because the purchase price exceeded $200,000. He advised Li and Zhai that they could not be released from the contract.
18. On 11 November 1998 Mr Woods, Wu and another person attended the Café with Zhai and Li. Woods then advised Zhai that he should return to China and submit a sub-class 457 business visa application (from China) as was required by DIMA.
19. On 20 November 1998 Zhai and Li attended the Law Partners office where they met with Huang and Wu. Zhai was asked to sign a number of documents that had been prepared which he explained to Zhai were associated with the transfer of the Café. The documents were not translated but when Li persisted in her requests for the documents to be interpreted, a person apparently in the employ of Law Partners attended the conference and interpreted some of the documents. Later – on the same day – Zhai and Chang attended Mr Wood’s office and signed a shareholder’s agreement. The agreement recorded that the shareholding in Hua Fu had been altered to cause it to own and operate the Café business and that 25 per cent of the shares in Hua Fu be issued to Law Partners Investments (Far East) Pty Ltd, a company controlled by Huang and Mr Woods. MARA was satisfied that despite the shareholder’s agreement and Minutes of a management meeting of 20 November 1998 recording that Zhai and Chang were encouraged to obtain independent legal advice, Mr Woods and Huang in fact did not give that advice.
20. On 21 November 1998 Zhai left Australia and returned to China. On 23 November 1998 Mr Woods prepared a file memorandum addressed to Huang and Wu with a copy to Mr Geary stating that the “project” concerning the Café purchase was “a potential problem” and views were sought regarding the management of the Café.
21. In early December 1998, Huang notified Li that the loan could not be arranged through the NAB to permit Hua Fu to complete the purchase price however he notified Li that Law Partners had made arrangements to obtain a loan through the Commonwealth Bank – subject to provision of another Power of Attorney from Zhai to Li. Security for the loan as provided by the Commonwealth Bank was a Bill of Sale over the Café.
22. On 8 December 1998, Li received a letter from Law Partners advising that “the purchase arrangements which were concluded by you” were different to the usual terms of purchase which may not be favourable. It notified that upon possession of the business and examination of the financial statements and other turnover details, the representations made prior to signing the contract may prove to be wrong.
23. On the same day Li, on behalf of Zhai, forwarded a letter by facsimile to Mr Woods notifying that even if the loan for the balance of purchase price was approved, Zhai was not prepared to pay the balance of the purchase price. Later in December 1998, Li consulted an accountant, Kee Saw at the recommendation of Wu. Apparently at the recommendation of Kee Saw, Li signed the loan documentation.
24. On 15 January 1999 Wu asked Li to attend the Law Partners office where she met with the vendors, Mr Geary and Wu. Mr Geary provided the vendor with a cheque for the balance of the purchase price and in return the vendor provided the keys for the Café.
25. On 18 January 1999 Li attended the restaurant and found that electricity and gas were disconnected and the vendor had not arrived at the premises as had been arranged.
26. On 22 January 1999 Mr Woods and Law Partners wrote to Zhai and Chang concerning the Café business and its viability. They sought release from liability in connection with the purchase and operation of the business. Chang and Li on behalf of Zhai later consulted another practitioner, Mr Tan. A meeting was conducted on 8 February 1999 between Tan, Chang, Li and Mr Woods concerning the future operation of the Café. Later the same day Tan terminated the retainer previously completed by Law Partners. Documents concerning the corporation Hua Fu were retained by Law Partners, exercising a lien until professional fees were paid.
27. Zhai and Chang later sold the Café in the sum of $50,000. The LPT found Mr Woods and Law Partners (and Mr Geary) guilty of a number of charges of misconduct. It decided that the Practicing Certificate of Mr Woods and Law Partners be cancelled for eight years from 16 August 2002. It also decided that Mr Woods, Mr Geary and Law Partners pay the Ombudsman’s costs of $253,344.
PRELIMINARY ISSUES
28. Subsequent to the lodging of proceedings by Mr Woods, the Tribunal granted a partial stay of the decisions under review.
29. Directions were made on 28 April 2003 to lodge proofs of evidence of witnesses on or before 30 April 2003. Those directions were made because Mr Woods had not complied with Directions made by Deputy President Forgie on 9 December 2002. An argument arose at the commencement of the hearing on 5 May 2003 because Mr Woods lodged, on 29 April 2003, a bundle of documents identified as L1-6 being sundry correspondence and two Affidavits, one in the name of a lawyer in China and the other in the name of Zhai, who was a complainant in the proceedings initiated before the LPT. The Affidavits were unsworn and unsigned. The Affidavits were typed in the English language yet it was known that Zhai did not speak English and no evidence of translation was provided. The documents held a date of transmission by facsimile of 22 November 2002. They were therefore in existence before the Deputy President made her directions (9 December 2002). It was learnt that Mr Woods had applied during that directions hearing to have a submission made, in camera, whereby he intended to submit that the Affidavits be received by the Tribunal to the exclusion of the respondent. That application was refused. It was also learnt at the commencement of the hearing that Mr Woods had sought undertakings from the solicitor and the counsel for the respondent that he would release the Affidavits to those two persons only to the exclusion of their client. That offer of undertaking was refused.
30. After we heard argument from both parties and adjourned to consider our ruling we directed that the Affidavits be received, only because they were lodged on 29 April 2003 and therefore complied with the direction to lodge documents before 30 April 2003. We indicated however that subject to anything further which might emerge during the hearing we intended to attach no weight to those documents. We decided that weight should not be attached, subject to further order, because in addition to the documents being unsworn, unsigned and without evidence of translation, Zhai was not being called to give evidence. This was a critical issue for us because it was submitted that the contents of the Affidavits purported to demonstrate that some of the evidence before the LPT was false and had that Tribunal heard the material which was contained in the Affidavits it would not have made the decision that it did. It followed, according to the submissions of Mr Woods, that we should know the evidence of Zhai in this review, because MARA was intending to rely on the transcript of the evidence at the LPT and its findings in support of the decisions that it made.
31. After we issued the direction as above with respect to the two Affidavits Mr Woods then made an application to adjourn the proceedings. He supported that application by seeking to have more time to establish that the evidence before the other Tribunal was not truthful in the absence of Zhai, who he did not intend to call.
32. We decided that the application for an adjournment should be refused. We noted that the Tribunal listed this application for hearing on 23 December 2002, some four and a half months prior to the first day of the hearing. We noted that two weeks had been reserved for the hearing and a multi-member Tribunal had been constituted. We decided in the circumstances that Mr Woods had had more than an adequate opportunity to prepare his case, including making applications to adjourn prior to 5 May 2003. We noted that considerable expense had been incurred by the respondent in its preparation for commencement of hearing on 5 May 2003. On balance we decided that an adjournment was not appropriate.
THE HEARING
33. Mr Woods was self represented in this review. The respondent was represented by Mr Star.
34. After Mr Woods was sworn to give his evidence we received, as exhibit A, a document lodged by him on 10 February 2003 entitled “Outline of Evidence of the Applicant”. Mr Woods referred to this document when he gave his evidence.
35. The document records that Mr Woods is presently 43 years of age having been born on 19 May 1959. He attended Melbourne Grammar School and graduated at Year 12 as School Prefect. He completed his law degree at Monash University between 1977 and 1981 and completed articles in 1982 but resigned as a first year solicitor to travel overseas. When he returned to Australia in 1984, Mr Woods was employed in a family business, Woods Auto Shops. That business was engaged in the repair of damaged motor vehicles which eventually had 20 outlets and over 200 employees. Mr Woods said that the business was established by his father and was based in a wide geographic area around Victoria. He was trained as a manager and said that the value of that employment was to instruct him in appropriate professional standards and how to deal with members of the public.
36. Whilst employed in his father’s business, Mr Woods also conducted a part time legal practice to which Woods Auto Shop customers were referred to recover the cost of repairs from other drivers. Mr Woods describes this as a “comprehensive service” to the customers.
37. The legal practice had steady growth, was eventually receiving between 80 and 100 referrals per month, which provided him with an “adequate income”. Mr Woods had been conducting the legal practice in Hawthorn which was staffed on a full-time basis by two law clerks who were supervised by him. He said he attended that office every second day.
38. Woods Auto Shops were later sold to Pacific Dunlop and Mr Woods commenced full-time practice at an office in Richmond and continued to be principally engaged with motor vehicle claims. The two clerks who were in his employ at the Hawthorn office also moved to the Richmond office and later he employed Mr Geary. Mr Woods said that the Richmond office was previously a warehouse which he renovated and fitted with second-hand furniture. He received clients referred from other panel beaters but eventually the practice expanded into conveyancing and property development. Later he acquired a law practice in Rye, Frankston and Mordialloc. He said by the end of 1990 he was conducting four suburban offices with a staff of seven or eight people. It was about that time that he commenced to develop a “set of standards with independent autonomous operations involving the exchange of staff between offices, maintained uniform productivity and expertise across all offices”. He said the offices grew and he was earning in excess of $1M gross in fee income per annum. He noted, however, that problems were emerging concerning file management and the profitability of files. He then commenced to apply the issues of practice and management that he learnt when employed at Woods Auto Shops and eventually realised that operating four suburban offices, each with their own staff, was prohibitive. He eventually closed the suburban offices and commenced practice in Collins Street Melbourne. He incorporated a company known as “Law Partners Pty Ltd” and each of the former suburban offices traded under that name. He said he developed a “type of franchise” involving the sharing of fees and joint advertising and promotion charges. He said the city office prospered, having acquired a credit union as a client.
39. Mr Woods said that he was joined by three other practitioners at the Collins Street office and a varied, diverse practice developed. He was principally engaged to manage the practice and the solicitors were engaged as “consultants”. Remuneration to the solicitors was calculated as a percentage of the fees earned by them and a percentage of total remuneration of the practice was paid to Mr Woods.
40. Mr Woods described his legal practice as being “successful” and “efficient”. It experienced rapid growth and eventually the practice moved to larger premises in Queen Street, Melbourne. At that location, Mr Woods said that he improved operating systems and devised a computer based accounting and trust accounting system. Additionally, he implemented systems with respect to file management. He described the system as permitting him to administer all staff and the practice as a whole, by observing the work undertaken by all solicitors and staff, all files, all costing and trust account records and other accounting records by this computer system. An administration and procedures manual (exhibit B) was devised and updated over a period of time. On each occasion that the manual was updated, the revised version was forwarded to each staff member by e-mail.
41. Mr Woods took us to a number of parts of the manual where the staff of the firm collectively devised corporate goals and a vision and commitment for the firm (page 2/1). He also asked us to observe the rules of practice which are described as “The Golden Rules” (page 7/44) which contained references to a written engagement between the firm and each client, reporting each attendance upon a client and keeping a file memorandum, maintenance of diaries, rendering of bills and undertaking administrative responsibilities. At page 7/46 there are references to the “Engagement and Pricing Policy”, being an explanation of what is expected of each solicitor in order to comply with the Victorian Legal Practice Act 1996 with respect to giving estimates of costs and explaining the basis of costing. At exhibit C, being a part of the office manual, there is a separate chapter entitled “Immigration Practice Directions”. This section was apparently developed after the immigration practice within Law Partners Pty Ltd developed from the mid-1990’s. Although Mr Woods said that the chapter concerning immigration practice was created in 2001 (being three or four years after the alleged conduct giving rise to the decision under review in these proceedings), Mr Woods urged us to interpret the manual and the immigration directions as an indicator of the type of “business” that he administered. He said that whilst he understood the Tribunal was required to make a finding of whether he was a fit and proper person, he said that his current practice and the basis for his administration of practice is consistent with the method and standards of administration he had been undertaking for many years. He said that he had been responsible for a “business” which had enjoyed steady growth (including progressively increasing fee income) which was achieved, he said, because clients were returning on two or three occasions. He said growth of this type is not achieved if clients are “ripped off”.
42. In terms of his practice as a lawyer Mr Woods said that he was motivated to “try new things”, largely influenced by his experience in management and innovation whilst working for Woods Auto Shop. He described the registration of the name “Law Partners Pty Ltd” as the first occasion that a generic name was used (and approved) by the Ethics Committee of the Law Institute of Victoria. He said he introduced business principals to legal practice extending to advertising in ethnic newspapers and advertising of fees. He told us that the software system implemented by him was the first of its type when it was introduced and he continues to update it and the information that it generates. He said that his business innovation also extends to “client contact training” which he described as training employees to have empathy with clients. He said he has also introduced Internet and intranet business practices and told us of an award he had won for his innovation.
43. With respect to the practice generally, he said that “senior practitioners” were described as “partners” although he acknowledged that there was no partnership. He said the firm “Law Partners Pty Ltd” was owned by him as to 97% and the remaining 3% was owned by Mr Geary. He said that each senior practitioner within the practice was responsible for generating costs and recovering fees. Each practitioner was responsible for administration charges and practice running costs. Solicitors who were not “senior solicitors” were described as “associates”, although they were not associates as commonly understood amongst legal practitioners. Mr Woods said they were all, in fact, self employed.
44. Law Partners Pty Ltd paid indemnity insurance for professional liability with all the practitioners within the firm paying a proportion of the total cost of the indemnity. He acknowledged that this was a “vexed issue with the Law Institute”.
45. The person Alan Huang was described by Mr Woods as an “associate style consultant” and “a liaison person”. Mr Woods said that Huang was not “overly skilled in migration work” and “when it came to detail he went missing”. Mr Huang was not a lawyer but was registered as a migration agent. He was said to be a person fluent in the Chinese language and was engaged to attract business from Chinese persons. Mr Woods said that he supervised Mr Huang who he regarded as being self employed (Transcript p51).
46. Towards the end of the 1990’s Mr Woods said that Federal Government policy changed with respect to business migration. He said that certain types of visas were available only if intended residents demonstrated that they held assets for certain value within Australia or intended to invest certain amounts of money. By reason of those changes, Mr Wood said that his practice again changed. He said that he intended to assist intending residents with the selection, purchase and management of businesses. He also devised a basis of retainer found at pages 80-84 and 92-94 of volume 2 of the T documents. He acknowledged that the arrangements that he entered into with clients were “experimental” and said that in his experience, Chinese clients would not enter into “open ended” time or item based costs arrangement and preferred a fixed fee basis for engaging a solicitor “with a guarantee of success”. Therefore if the fee retainer at page 80 was unacceptable to a client, Mr Woods said that fees were secured by the retainer document found at page 92.
47. The retainer at pages 80-84 is described as “Business Commencement and Management Retainer”. It is reproduced as follows:
As we have discussed, you are interested in retaining Law Partners to assist you in finding, commencing and managing a business in order to allow you to make a visa application to reside either temporarily or permanently in Australia.
You have indicated that you have at least $100,000 to invest in a business and Law Partners are prepared to undertake the following work on the following terms.
STAGE 1 – BUSINESS PROPOSAL
We will find and recommend a business proposal for you to undertake using no more than $100,000 investment from you. The business may come from any of a wide range of activities but we will attempt to arrange something that comes within your range of skills and experience. The business proposal may involve other equity partners or borrowings from banks or other financial institutions.
The business proposal that Law Partners will recommend will have the following features:
·it will be a detailed proposal in writing;
·it will be designed to make a profit for you;
·Law Partners will be engaged as the business managers; will provide at least the services set out in below under the headings “Stage 2 – Business Commencement” and “Stage 3 – Business Management & Administrations” and will hold 25% of the shareholding of the business;
·the money invested by way of shareholding will be kept to a minimum and any capital invested by you will, as far as possible, will be by way of loan account or redeemable preference shares which will return you at least 5% interest. The loan account will be secured by a debenture over the company if possible.
·it will be supported by opinions of expert professionals such as accountants, planners, architects, builders, or other consultants as Law Partners deems necessary to make a proper assessment of the requirements necessary for the success of the business.
Provided that you agree to proceed with the business proposal as recommended then Law Partners will charge nothing for the preparation of the business proposal but you will be liable for any invoices incurred for opinions or work as noted above. Should you decide not to proceed with the business plan in the form recommended then Law Partners will charge you according to the enclosed time cost retainer which may well be in the vicinity of $5,000 -$10,000.
In order for us to commence this project on your behalf you will need to:
1.open an accoun [sic] deposit in funds as agreed;
2.arrange a bank to provide a bank guarantee to us to secure your performance under this retainer;
3.sign a copy of this letter and the time cost retainer.
STAGE 2 – BUSINESS COMMENCEMENT
Once you have agreed with the business plan, a note confirming your agreement or a more formal shareholders agreement will be prepared which will cover the points contained in this retainer in more detail. It will also appoint James Woods or another Law Partners appointee in a senior management role.
The business proposal will then be put into operation.
Law Partners will be entitled to charge the business only those fees that would be incurred for normal legal work by a business such as is being proposed. This specifically excludes any management work. The payment of any legal fees will be deferred until the business is making a profit.
STAGE 3 – BUSINESS MANAGEMENT & ADMINISTRATION
Once the business has commenced, Law Partners will undertake whatever work is necessary for the management and administration of the business other than work required in the operational side of the business. These duties will include:
ACCOUNTING ADVICE AND ASSISTANCE
We shall prepare accounts for the business on a monthly basis and, in particular, we shall:
·create a chart of accounts
·enter the data
·undertake bank reconciliations
·produce a profit and loss and balance sheet
·produce a creditors, debtors or other reports (where applicable)
·report to you
In addition, we will advise you on any improvements that could be made to the accounting aspect of your business.
Our fees (exclusive of disbursements) for the above will be:
Turnover range($)
Frequency
Fees
0-250,000.00 per annum
Monthly
$400.00
250,000 – 500,000
Monthly
$650.00
500,000 – 1,000,000
Monthly
$900.00
1,000,000 – 2,000,000
Monthly
$1150.00
Over 2,000,000 by negotiation
As we have indicated, no fees are payable to Law Partners if the business is not making a profit.
ANNUAL COMPLIANCE SERVICES
Following the end of the financial year, we shall prepare and lodge tax returns for the persons included in this retainer.
Following the end of the financial year, we shall prepare and lodge an annual return for the companies included in this retainer.
We shall provide a registered office for the companies included in this retainer.
We shall prepare any necessary documents for the Australian Securities Commission in order to ensure that the companies included in this retainer comply with the Australian Corporations law.
We shall maintain the company register and prepare the necessary documents for any change of directors, transfer of shares, addition or reduction of capital, change of registered office, debenture or charge in favour of the company etc.
Our annual fees (exclusive of disbursements) for the Annual Compliance Services are:
Turnover range($)
Fees
0-250,000.00 per annum
$1,000.00
250,000 – 500,000
$1,500.00
500,000 – 1,000,000
$2,000.00
1,000,000 – 2,000,000
$3,000.00
Over 2,000,000 by negotiation
As we have indicated, no fees are payable to Law Partners if the business is not making a profit.
MANAGEMENT ADVICE AND ASSISTANCE
Law Partners will do our best to ensure that the business is properly managed and administered. No fee is payable for work done in this regard unless the work done is legal work that would in normal circumstances need to be done by a qualified solicitor and, in this case, the fees charged would be according to the enclosed time cost retainer but would not be payable to Law Partners if the business was not making a profit.
YOUR OBLIGATIONS
SEEK INDEPENDENT LEGAL ADVICE
Law Partners will be acting on behalf of you personally in the immigration application and will be acting on behalf of the company and the business. We cannot act on behalf of you personally in any of the company or business transactions as we will have a potential conflict of interest on account of our shareholding. In order that you[r] personal interests are protected in relation to your personal dealings with the company we advise that you should seek independent legal advice.
PROVIDE US WITH CORRECT AND CLEAR INFORMATION
You must provide us with correct and clear information. If the information is in a language other than English, you must have the information translated into English.
CHANGE OF ADDRESS & PROMPT RESPONSE
You advise us immediately of any change of address and respond promptly when we make a request of you.
OUR AUTHORITY TO ACT
If there is any uncertainty about any of these points speak now with our staff member to clarify your doubts. Please do not delay, however, as it is Law Partners policy not to continue to handle a matter until our clients fully understand the implications of their legal action and have instructed us in writing. If you delay in providing us with your formal written instructions (and an advance of costs, if required) then you may find that you suffer some detriment as a result. Law Partners cannot be responsible for any detriment that you suffer if you have not provided us with written instructions in the form that we require.
Yours faithfully,
LAW PARTNERS
per James M. Woods.
encl.
AUTHORITY TO ACT
I authorise Law Partners to act on my behalf and I agree to pay their charges on the basis outlined above.
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Client Signature Client Signature (if more than one client)
Date:
48. The retainer at pages 92-94 is described as “Law Partners Retainer Agreement”. It is reproduced as follows (save that the address of Zhai, recorded in the document is omitted for these purposes):
LAW PARTNERS RETAINER AGREEMENT
CLIENT:
ADDRESS:MATTER:
Law Partners looks forward to acting as your legal advisers.
This agreement is our authority to act on your behalf. It will apply to this matter and future matters unless varied in writing. Read it carefully before signing.
Before instructing us to continue on this or any matter, you should understand:
A.The nature and extent of the work that we are going to perform on your behalf;
B.The probable cost of the matter;
C.The possible expenses for which you may become liable including our fees and disbursements and also the fees and disbursements of other parties that you may be required to bear;
D.The method by which you are to be charged for our service;
E.The time at which you are required to pay our accounts;
F.The appropriate avenues for expressing any dissatisfaction with our performance.
If there is any uncertainty about any of these points speak now with our staff member to clarify your doubts. Please do not delay, however, as it is Law Partners policy not to continue to handle a matter until our clients fully understand the implications of their legal action and have instructed us in writing. If you delay in providing us with your formal written instructions (and an advance of costs, if required) then you may find that you suffer some detriment as a result. Law Partners cannot be responsible for any detriment that you suffer if you have not provided us with written instructions in the form that we require.
HOW YOU WILL BE BILLED
Law Partners costing works as follows:-
1.Each file has an opening fee (presently $25.00);
2.Law Partners will record the time spent on your matter by each person in the firm in time units of 6 minutes or part of 6 minutes. Time will be recorded for all activities including incoming and outgoing phone calls; incoming and outgoing letters and documents; typing and secretarial; research, travelling and all other attendances;
3.The directors of the firm are James M. Woods and Brendan V. Geary, with other persons handling files engaged as employees and consultants, and the person handling your file will be An Lieu whose hourly rate is $180. That person may be assisted by support staff whose hourly rates will be less than this rate. These rates are changed on July 1 each year and therefore any matter which spans more than one financial year is likely to reflect a change in the hourly rate charged from July 1 onwards.
4.When the costs on your file exceed $250.00 or at the end of each month, Law Partners may render an account detailing the work done and the time spent on the work as well as any disbursements incurred. Any queries regarding the account should be directed to the person who is handling your file within 30 days from the date of the account. After this time, you will be deemed to have accepted the account.
5.The account must be paid within 30 days of the account being rendered.
6.Law Partners reserves the right to request and receive funds in advance of costs and disbursements and not to proceed with any matter should those funds not be received or should an account remain unpaid.
7.You will be charged for incidental expenses at the following rates:
Fax Reception or Transmission $1.00 first page
Printed Letter and Photocopies $0.30 per page
Phone calls – local (.30c), STD (.80c/minute), Mobile (.80c/Minute)
All other disbursements will be charged at cost:
e.gState and Federal Duty, Government Fees & Stamp Duty
Barristers Fees, Professional Reports
Postage & Delivery Charges
You have the right to negotiate an agreement about the payment of legal costs and to receive written bills from us. If the bill you receive is not in itemised form then you may request an itemised bill within 30 days.
You may minimise your legal costs by avoiding unnecessary telephone calls and attendances and, when requested, providing accurate information promptly.
FAILURE TO PAY ACCOUNTS OR PROVIDE FUNDS
For unpaid accounts, you will be liable to pay us interest of 2% per month or part of a month on any outstanding accounts that go past our trading terms.
In the event that an account remains unpaid or funds that are requested by us are not forthcoming, Law Partners may choose not to continue to act. We must adopt this practice in order to ensure prompt payment of accounts, continuity of service and to keep legal costs and fees down to a manageable minimum. In some matters, our failure to continue to act may lead to cost or other detriment being incurred by you for which you understand and agree that we cannot be held responsible.
RECORD KEEPING
It is our general practice to destroy files after three years, except those with trust account transactions which are retained longer. Original documents such as Wills and Titles are, of course, retained without limit and without charge until they are used or become obsolete.
INVESTMENT ACCOUNTS
Where we hold money for you for an extended period of time we shall endeavour to invest that money in an Authorised Trustee Investment so as not to lose interest. We request that you provide us with your Tax File Number so that the financial institution will not withhold interest from you. Please be assured that the Tax File Number will be kept in the strictest confidence and will not be given out without your specific authority or as required by law.
CLIENT SATISFACTION
You should be kept informed as to the progress of your matter and may request a progress report at any time.
We should act quickly in the handling of your matter and in responding to your queries.
Should you wish to discuss any aspect of our performance, or pass on a complaint or compliment, our Managing Partner, Mr James M. Woods would welcome your call. Mr Woods may be contacted at our Melbourne office on 9602 2266.
If you remain unsatisfied with our service, then you may make a written complaint to the Legal Practice Board, Level 29, 385 Bourke Street, Melbourne 3000
AUTHORITY TO ACT
I authorise Law Partners to act on my behalf and I agree to pay their charges on the basis outlined above.
I authorise Law Partners to invest any monies received by them on my behalf in interest bearing investments in any registered financial institution.
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Client Signature Client Signature (if more than one client)
Date: 3 September 1998
49. Mr Woods described the arrangement concerning Zhai which would have also been followed with respect to other clients. He said that Zhai was intending to apply for a sub-class 457 visa and in order to do so, he needed to acquire a business in Australia to demonstrate an ongoing connection with Australia. He said a corporation would be acquired and it was intended to be the purchaser of a business. In the present circumstance, the directors of that corporation were Mr Woods, Mr Huang and the clients. He said the clients would then lend monies to the company being the equivalent of the purchase price of the business. In the present case it was $250,000. The clients would be described in the books of account of the company as being creditors. The retainer between the clients and Law Partners Pty Ltd provided that a debenture would be issued in order to secure the interests of the clients in the event that the business was wound up.
50. Mr Woods said that from his point of view and that of Law Partners Pty Ltd, in addition to obtaining fee income from the acquisition of the corporation and the purchase of the business, income would also be achieved from the capital growth of the business. Mr Woods said, “I intended to start with nothing and make something of the business and end up with something that had value”. By way of example he said that “if the clients provided the capital and I found a company which was managed well and had capital growth and it was eventually sold for $350,000, the clients got their $250,000 back plus 75% and we got the remaining 25%” (the references to 25% and 75% were by reason of the relative proportion of shareholding within the corporation between Huang, Mr Woods and the clients).
51. In terms of “risk”, Mr Woods acknowledged that if the business failed the clients would suffer losses because it was they who invested the capital entirely. Mr Woods and Law Partners Pty Ltd did not contribute any money towards the purchase of the business. The debenture, when registered, was designed to protect the clients against losses. Mr Woods acknowledged that the debenture was not ever registered. He acknowledged that the “Business Commencement and Management Retainer” letter records under the sub-heading “Business Proposal” that Law Partners Pty Ltd will recommend a business proposal that (inter alia) “the money invested by way of shareholding will be kept to a minimum and any capital invested by you will, as far as possible, will be by way of loan account or redeemable preference shares which will return you at least 5% interest. The loan account will be secured by a debenture over the company if possible.” (A copy of this letter is reproduced earlier at paragraph 47. The copy forwarded to Zhai is dated 7 September 1998). Whilst Mr Woods agreed that he did not register the debenture, and that he should have registered it, it was his contention that his failure to register the debenture was not to achieve any financial advantage.
52. Mr Woods said that in 2001, he registered a charge on behalf of Law Partners Pty Ltd with the Australian Securities and Investment Commission (“ASIC”) against the property held by two other corporations wholly owned by him. He said the failure to register the charge over his own property in favour of his practice before 2001 indicated carelessness on his part by not registering that charge at an earlier time. Similarly he said that his failure to register debentures with respect to the business transactions of two other clients at or about the time that he was acting for Zhai also amounted to carelessness.
53. Mr Woods said that undue attention and weight was attached to his default in failing to register the debenture because the solicitor who acted for Zhai subsequent to him (and who had possession of all documents and files) also did not register a debenture.
54. Mr Woods described two other ventures where he acted on behalf of persons in transactions involving the acquisition of a business where those persons were also seeking a visa. He told us about the commencement of a gymnasium business in South Melbourne known as “Salt of the Earth” where his client was Mr Lee. Mr Woods said the business was not financially successful despite it operating for three years before it was eventually sold. He said Mr Lee was seeking to qualify for a sub-class 845 visa where he needed to prove that he had an “established business in Australia”. Part of that qualifying criteria was the employment of three full-time employees. Mr Woods said that the income generated by the business was not sufficient to pay the salaries of three full-time employees however, in order to qualify for the visa, Mr Lee chose to continue to run the business at a loss in order to demonstrate his employment of the persons. Mr Woods said that Mr Lee “accepted the loss” but nonetheless regarded himself as having “succeeded” because he eventually qualified for a visa. Mr Woods said that he personally achieved nothing from the transaction and certainly did not receive any profits when the business was sold.
55. Mr Woods also told us about his involvement in the purchase of the Aki Restaurant in Bourke Street, Melbourne on behalf of a client seeking a sub-class 457 visa. He said a Japanese client approached him directly and not through Mr Huang. He recalled that there had been a breakdown in the relationship between the client and the chef who were previously in partnership in the operation of the restaurant. He said the client did not speak English and it became obvious that the business had been poorly managed. He learnt that the Department of Health was about to close it because of poor hygiene yet in order to resurrect the business, Mr Woods sought a deferral of closure by the Health Inspector with the City of Melbourne. He said he also arranged to have the liquor licence and lease transferred to the name of his client. He said his client engaged him on the basis that they would both enter into the business retainer arrangement without fee. Mr Woods said that because the business had little value at the outset, he expected considerable returns when the restaurant was operating and when his business practices had been implemented. However, when a conflict of interest emerged, the client engaged other solicitors and the file was transferred including a transfer of shares. Mr Woods said that his clients benefited by his involvement and he told us that the solicitors who thereafter acted for his client also did not register a debenture.
56. Mr Woods explained that he volunteered the information concerning these other business transactions to demonstrate that his intention always was to offer “a fair deal” for his clients. He said it was never his intention that his clients would lose but rather he would promote his clients’ interests to ensure that they “got what they wanted – a visa”.
57. In relation to his relationship with Zhai, Mr Woods acknowledged that this was a matter of some controversy and extensive examination before the LPT. Mr Woods said he first met Zhai in August 1998 and relied on his evidence at the LPT (volume 8 page 558 of transcript). He acknowledged that other witnesses disputed this. When he was questioned at the LPT about this date, Mr Woods then said he had a 70-80% recollection of the meeting and a 50% recollection of the date. He said that the first meeting with Zhai was “not significant” and was only for the purposes of meeting him as a potential client.
58. Mr Woods said that he had “no involvement” in the selection and purchase of the City Paragon Café (“the Café”). He said he had no knowledge of the meeting at the offices of Law Partners Pty Ltd on 5 November where the contract to purchase was signed. He said the meeting and the signing of the contract was “outside my knowledge”. He reinforced this belief by pointing to a letter that he wrote to Zhai on 6 November (T documents volume 2 page 161) where a proposal was sent to Zhai concerning the purchase of a clothing business. He said that had he been aware of the selection and purchase of the Café and the signing of the contract on 5 November, he would not have sent the letter of 6 November.
59. Mr Woods said that he first learnt about the contract being signed for the purchase of the Café on 6 November although he said that “he did not have a strong recollection of it”. He said his first involvement with Zhai and his purchase of the Café was on 11 November when he and Li attended the Café.
60. On that day Mr Woods said that it was his belief that Zhai and Chang had agreed to “pool funds” to purchase the Café. He said he had no knowledge at all that there was any reluctance on the part of Zhai and Chang to purchase it. There was no discussion on 11 November of the merits of the business nor about the purchase price. Mr Woods said that on 11 November he did not know what price had been paid for the business.
61. By reason of him having attended the Café on 11 November and offering certain advice, Mr Woods then wrote to Zhai and Chang on 16 November (volume 2 page 162) detailing matters which needed attention, namely, establishment of a company, shareholding, establishing accounting and administration systems, attending to contracts and transfer of lease and attending with respect to immigration applications. Mr Woods said that this letter indicated that he was then turning his mind to what was needed to be done to ensure that the sale of the Café was undertaken competently. The letter proposed that a meeting be held at his office with Zhai and Chang on 20 November and whilst the letter discussed the shareholding in the company, (which would be the purchaser of the Café). Mr Woods could not recall whether the proposed shareholder’s agreement was forwarded with the letter.
62. On 20 November a meeting did take place at Mr Woods’ office. He said the discussions at the meeting lasted for many hours. At one stage the meeting broke up where Zhai, Chang and Huang spoke privately in another room. When the meeting resumed Mr Woods said that there was discussion concerning the shareholding in the company which had been purchased by Zhai and Chang and which was intended to be the purchaser of the Café (Hua Fu). It was proposed that the shareholding in that company be by 37.5% to Zhai, 37.5% to Chang and 25% to Law Partners Investments (Far East) Pty Ltd. Mr Woods pointed to the share transfer forms found at pages 169/171 of volume 2 of the T documents to confirm the shareholding, although Mr Woods was unable to explain why the shares that had been transferred to Zhai were transferred by him, to a corporation of which he was the principal shareholder namely, Australia Herald International Pty Ltd (refer page 170). Additionally, the shareholding recorded in the Minutes of Shareholders of Hua Fu on 17 November (Vol 2 p168) differs from the allocation found within the Agreement of 20 November (Vol 2 p172-181).
63. On 20 November 1998 Zhai, Chang, Law Partners Investments (Far East) Pty Ltd and Hua Fu Enterprises (Australia) Pty Ltd executed an agreement (volume 2 page 172/181). The agreement concerns the allocation and proportion of shareholding (where Zhai and Chang are described as each having 37.5% of shareholding and Law Partners Investments (Far East) Pty Ltd holding the remaining 25%), appointment and remuneration of directors, loans by and returns to shareholders, bank accounts, transfer of shares, procedures in the event of dispute and an acknowledgment by Zhai and Chang concerning potential conflict of interest.
64. At clause 4.1 to 4.4 under the sub-heading “LOANS BY SHAREHOLDERS” the following is recorded:
4.1Zhai and Chang shall advance funds of not less than $100,000 to the Company.
4.2No interest shall be payable on these loans except as provided in clause 5 below.
4.3The repayment of the advances and payment of the 5% return noted in clause 5 below to Zhai and Chang shall be made ahead of any other payments (as far as the law allows) and shall rank in priority to any other liability of the Company.
4.4The company charges all of its property and undertaking in favour of Zhai and Chang as security for repayment of the advance from Zhai and Chang to the Company and the Company shall provide a debenture over the assets of the Company on the usual terms and conditions to Zhai and Chang which shall be prepared by the Company Solicitors at the Company’s cost or by Zhai and Chang’s solicitors at Zhai and Chang’s cost with, in either case, the Company paying all disbursements associated with the execution and registration of the debenture.
65. The “Company” referred to above is Hua Fu. Mr Woods said that these clauses gave Zhai and Chang priority before Law Partners Investments (Far East) Pty Ltd although he acknowledged that as the company solicitor he did not register a debenture.
66. At paragraph 7.1 to 7.4 under the sub-heading of “CONFLICT OF INTEREST” the following appears:
7.1Zhai and Chang acknowledges [sic] that:
7.1.1Woods and Huang are associated with the Company Solicitors in that Woods is the Managing Director and a shareholder of the Company Solicitors and Huang is engaged as a Manager;
7.1.2the Company Solicitors and Huang are shareholders in LP Investments;
7.1.3Woods, Huang and LP Investments are acting on behalf of the Company and their own interests and that there may be a conflict between the best interests of those parties and/or the Company and her best interests;
7.1.4the Company Solicitors are acting on behalf of the Company and that there may be a conflict between the best interests of the Company and her best interests.
7.2Zhai and Chang understand and agrees [sic] that Woods and the Company Solicitors will not be acting on behalf of Zhai and Chang in the operations of the Company.
7.3Zhai and Chang have, prior to the execution of this Agreement, obtained independent legal advice from solicitors regarding this agreement and shall obtain independent legal advice in relation to any decision made by them in relation to their involvement with the Company.
7.4Zhai and Chang have, prior to the execution of this Agreement, obtained independent financial advice from qualified accountants regarding this Agreement and shall obtain independent financial advice in relation to any decision made by them in relation to their involvement with the Company.
67. Mr Woods said that he did not believe that he was at any conflict of interest in relation to this proposal however these clauses were inserted in the event that a conflict did emerge and because he believed that he needed to alert Zhai and Chang to the potential of a conflict of interest. Despite the content of paragraphs 7.3 and 7.4, Mr Woods said that he did not insist that Zhai and Chang obtain independent legal advice before they executed this agreement, nor was he aware whether they had obtained any advice prior to it being signed. He said he could not recall whether this agreement was forwarded to Zhai and Chang with his letter of 16 November (refer paragraph 61 of these reasons) and could not recall whether Zhai and Chang acknowledged having read the document prior to it being executed. Mr Woods said that he “should have taken them (Zhai and Chang) to other lawyers” before this agreement was executed. Mr Woods said that he had previously referred clients to a firm known as “Lincoln’s” and then to Mr Fred Tan at that firm. He said that Zhai and Chang were not referred to Mr Tan at or about this time.
68. Throughout the meeting on 20 November, an interpreter in the Chinese language or any Chinese dialect was not present. Mr Woods said that interpreting to Chang and Zhai was undertaken by Huang and Li.
69. Mr Woods said that the agreement was signed at his office on 20 November and all persons left without comment. He acknowledged however that there was a discrepancy between his evidence and the evidence at the LPT between other persons at the meeting. He acknowledged that Li in evidence at the LPT said she asked that the agreement be amended by inserting another clause. He acknowledged that she said at the LPT that another clause was inserted but he had no recollection of it and in the documents lodged there is no apparent reference to that amendment. Mr Woods said that any amendment to the agreement would have to have been completed by him and he had no recollection of the agreement being amended. He said that the clients were free to take the document away and obtain advice and return it however they chose to sign it on 20 November.
70. Mr Woods said that he thought the Café had the potential to be a good business and he had no reason at 20 November to believe that it would not have been profitable. He said that he had thought that Huang and the clients had undertaken all relevant investigations prior to signing the contract for purchase. As far as he was concerned, at 20 November after all the documentation had been completed, the business was in a position to commence operation. Mr Woods engaged a manager (Mario Verescuk) to inspect the Café and report on matters that needed attention at the commencement of operations (refer volume 2 page 182). Mr Verescuk apparently reported on 23 November that it appeared to him that the Café had been running at a loss and that it would be difficult to cause it to become profitable (volume 2 page 185). Mr Woods said this was the first indication to him that the business was not likely to be successful. It occurred to him then, for the first time, that the purchase price for it was too high.
71. At page 185 is a file note completed by Mr Woods directed to the attention of Huang and Wu with a copy to Mr Geary which he said was an internal memorandum which was retained on his files. A copy of it was not forwarded to the clients. That file note is reproduced as follows:
23 November 1998
URGENT ACTION IS REQUIRED ON THIS PROJECT.
I have spoken this morning with Mario Verescuk who has decided not to become involved in this project. His reasons are that he believes that the business is making a loss and that it would be very difficult to make the business make a profit. He has had two other people (including the proposed chef) look at the business and they have come to the same conclusion.
I have already recorded my thoughts on the project which, in summary, are:
1.there was not sufficient time spent in checking out the business and ensuring that the figures presented are correct;
2.the deal done by the clients was not favourable to them – if the business is doing the figures that Mario thinks, the purchase price is too high and the payment of such a large amount in advance does not assist them if they want for some reason to withdraw nor does it keep the Vendor interested in the business between the initial deposit and settlement;
3.a good manager is essential for the success of the business.
A decision must now be made on the future of this project. The options are:
A.work towards escaping the contract. This would involve showing that the figures presented are wrong and there has been a misrepresentation. I don’t think that this will be a problem. However, getting the $180,000 from the Vendor will obviously be far more difficult;
B.proceed with the contract. If we do this, then:
B.1a new manager must be sourced and engaged quickly. I understand that David will do this;
B.2a new deal be struck with the Vendor to allow payment of the remaining purchase monies later or having the remaining purchase monies in trust for a period;
B.3at the very least, the revised contract documents should allow us as easily as possible to mount an action for misrepresentation once the figures reveal themselves. This is in Brendan’s area and my main suggestion is to find some way to have an asset in Australia that we can get to in the event that we proceed against the Vendor company and obtain judgement. Perhaps getting the Vendor company to confirm the figures with a personal guarantee may be possible combined with a check on the personal assets of the guarantor;
B.4sourcing of the remaining finance will be necessary. This job is now with you.
THIS PROJECT IS A POTENTIAL PROBLEM AND MUST BE GIVEN THE HIGHEST PRIORITY
72. On 3 December 1998 Mr Woods forwarded a letter to Zhai and Chang. It is written in the form of a report of activity undertaken by him subsequent to 20 November and gives his advice as to what he recommends should be undertaken. This letter assumed considerable significance during cross-examination of Mr Woods. Omitting irrelevant parts, it is reproduced as follows:
RE: CITY PARAGON CAFE PTY. LTD. - BUSINESS OPERATIONS
As you are aware, there have been some small delays in arranging settlement of the purchase of the business. The main reason for the delay is that my staff members have been attempting to renegotiate the purchase arrangements for the business. As I explained to you in our meeting on 20 November 1998, the purchase arrangements, which were concluded by you were vastly different from the usual terms of purchase and I have already recorded my thoughts that the difference in the purchase terms was not favourable to you. For this reason, my staff members have spent the last week or so attempting to renegotiate the purchase arrangements. Unfortunately, this attempt to renegotiate has not been successful, although it was definitely worth trying.
The vendors are insistent that they will not allow us to take over the operations of the business until the purchase price is paid in full. The problem with this is that I have a high level of suspicion that once we are in possession of the business, the turnover and other figures will be well outside of what has been represented to you. If this is the case, then we will be in the difficult situation of having advanced a purchase price and then potentially within a month or so of paying it, be asking for it to be returned. I must repeat that I do not [sic] any hard evidence that the turnover of the business is not what was represented to you. My suspicion of this being the case comes from the various investigations that I have made into the business following your decision to purchase the business. Essentially, my suspicion is based on observations of the shop by various people, including some who have extensive experience in operations of this type of business. I may be overly cautious and I certainly hope that my suspicions are not well founded.
Given that there has already been $180,000 paid to the vendor, I confirm that Mr Alan Huang and Mr David Wu are in the process of attempting to raise some finance to complete the purchase, once that finance is raised, we will settle the purchase and take over the operations of the business.
The main decision now for you to make is the date of the handover. It could be as early as Monday, 11 December, or Monday 18 December (depending on when the finance is approved). I have a slight preference for delaying settlement until the middle of January 1999. The reason for this is that the period before Christmas will be probably be extremely busy. You may see this as meaning that the business will make a huge profit (and you may be right); however, my belief and experience in business generally is that there can be mistakes made and a significant amount of wastage in the early stages of the management of the business such as this. In this situation, despite a high volume of turnover, it may be still likely to make no profit or even a loss. I would rather takeover in the middle of January, which leave the vendors having to pay their staff and rent through the very quiet first 2 weeks of January. I would expect the business to start improving in the second 2 weeks of January and this would allow us to take over in a relatively quiet period and implement the necessary management and training systems to get the business going in the direction that we want it to. It will obviously save in holiday pay, rent and other overhead expenses during that period. I don't hold this view strongly and if you wished, we could go ahead earlier. Unless I hear otherwise, I will plan for settlement of the business in mid-January. If you wish to do otherwise, then advise Alan Huang as a matter of urgency.
On the management side, we have secured the services of an experienced chef, who will be working in the business (and be paid by the vendor) starting in the near future. Additionally, we have a Chinese speaking waitress who will also be doing the same. This will mean that these 2 people understand the way the business operates when we take it over and we will have spent no money in their training. I have a couple of possibilities for managers, but nothing finalised as yet. As a fallback position, my wife, Marion, who is a chef and has operated businesses such as these would be available for a short period to act as the manager if a suitable person wasn't found.
I will report to you again as developments occur.
73. Mr Woods said throughout the remainder of December 1998 he, and his partner Mr Geary, secured a date for settlement of the purchase, transfers of leases and other legal documentation was completed and the balance of purchase price was secured by his clients after consultation with an accountant.
74. The purchase of the Café was settled on Friday, 15 January, 1999 and possession was given on Monday 18 January 1999. Mr Woods said that he attended the Café on 18 January and as a result of his observations he convened a Management meeting on 19 January of Hua Fu. Minutes of the meeting (Vol 2 p215-216) deal with issues of management, staffing, equipment, stock and other purchases, advertising and marketing. Under the sub-heading of “General Overview” Mr Woods recorded “Urgent action needs to be taken in the next two to three weeks to iron out any initial problems”. The minutes also record that “BG (Brendan Geary) needs to do a letter to Nancy (vendor) to ensure that she honours her obligations in showing new owners how the business operates” (The vendors – despite the contract – did not attend the premises upon obtaining possession).
75. On 22 January 1999 Mr Woods wrote a letter to Zhai and Chang (Vol 2 p220-222). This letter also assumed considerable significance during cross-examination and it is reproduced as follows:
RE: CITY PARAGON CAFE PTY. LTD. - BUSINESS OPERATIONS
As you are aware, this transaction settled on Friday, 15 January 1999 and we took over the operations of the business on the morning of Monday, 18 January 1999.
I must unfortunately report that the fears that I and other Law Partners staff members have expressed to you on several occasions both orally and in writing about the state of the business proved to be completely correct. In summary, the business is in a parlous state.
The physical resources of the building i.e. the premises and equipment were filthy and much of the equipment had not been cleaned for some time (more than several months). I think it's highly likely that if there had been a visit by a health inspector the business would have been shut down immediately. Further, several of the pieces of equipment require maintenance to make them properly operational.
The business has no real management and the staff that have been available over the first week have been extremely inexperienced, although very willing to do their best to try and keep the business operational. The vendor has not attended at the business as promised.
Most importantly, the takings of the business appear to be around $400.00 a day. On this basis, the business will be making a significant loss even with the reduced staff that we are currently running.
Urgent decisions need to be taken about the continued operation of the business and for this reason I have called a directors' meeting for 5.00 p.m. on Tuesday 2 February 1999 at this office. Level 1, 140 Queen Street Melbourne. The meeting will also serve as a Management Meeting and the items of business are found on the enclosed agenda.
One further item will be discussed which is technically not a part of the business or the café and relates to the arrangements between us as the manager of the business and legal advisers to you and the business.
As you can see from the enclosed agenda for the director's meeting and from my comments above, I think the chance of the business making a profit in the next 6 months is not very great. This concerns me on a number of fronts.
The first area of concern is that Law Partners remuneration for the on-going management and administration of the business is largely based on the business making a profit. We have already given a large amount of time from staff members at all levels to simply keep the business open and try and bring some sort of order to the chaos that we inherited. As we were not involved in the purchase arrangements, I do not believe that I have an on-going obligation to manage the business, especially when such management is almost certainly not going to bring any form of remuneration for a considerable period.
My second concern is that another incentive for Law Partners to be involved in the management of the business was the possibility of a capital return at some stage in the future should the business be able to be improved above the purchase price. I think the chance of this occurring within the next few years is remote, given that upon any sale, we would have the Commonwealth Bank loan and your respective loan accounts before any capital profit was available for distribution. My guess is that the business is, at the moment, worth only the value of fixed assets in it and it would be an exceptional result for us to get the business back to a point where you could recoop your loan funds.
So, as you can see from these first 2 concerns, Law Partners is faced with the prospect of a long slog to bring the business back to the point where it should have been when we started. I know you have bought the business in good faith, but I must again make the comment that the deal you have organised is an absolute shocker.
Despite all this, the project presents something of a challenge and it does give our staff members an interesting and different look on the world of commerce. I have discussed this with a number of staff members and they are all keen to proceed to see what can be done to rectify the situation.
This brings me to my third concern, which is despite all of our efforts to date and significant efforts to be given in the future, the business may never make the sort of returns that you would expect given the amount of your investment. What concerns me is that having put in a significant effort over say 12 or 18 months for little or no reward then you may turn around and blame Law Partners for these problems. I am happy to commit our resources to you on the basis that we have already agreed. However, I will not do that without your agreement to release Law Partners from any liability in connection with the acquisition and operation of the business.
335. In Re Control Customs Pty Limited and Chief Executive Officer of Customs [2001] AATA 284 Purvis J conducted another review into a decision made by the Chief Executive Officer of Customs (“CEO Customs”) who had decided that not to grant a licence to the applicant corporation to act as a customs broker under the Customs Legislation Amendment Act (No 2) 1999. The respondent decided that a director of the applicant corporation was not a person of integrity.
336. His Honour referred to his decision in SRH but on this occasion found that the director was not a person of integrity. The circumstances giving rise to the review concerned the fraudulent misappropriation of half a million dollars of customs duty and the eventual sentence to three years imprisonment with a non-parole period of 12 months.
337. Despite the applicant director acknowledging that his defrauding of the Commonwealth was wrong, accepting his guilt and expressing his shame and regret His Honour, applying the criteria of integrity that he found in SRH decided that the director of the applicant corporation displayed a lack of moral principle and honesty. Account was taken of the nature of the offences, the degree of seriousness and the subsequent conduct of the director. In the exercise of his discretion His Honour found that the applicant director was not a person of integrity.
338. This decision is noteworthy because it demonstrates a consistency in the application of the principles underlying the notion of integrity particularly in the context of persons who have a duty to the Commonwealth and who at the same time owe a duty to their clients.
339. The latter decision is also noteworthy because His Honour decided to accept into evidence and take account of a transcript of evidence of a hearing convened by the National Customs Agents’ Licensing Advisory Committee (“the Committee”). The Committee recommended to the CEO of Customs that the director of the applicant corporation should not be granted a customs agents licence. In the present case, despite some ambiguity in the submissions made by Mr Woods concerning the application and relevance of the evidence before the LPT, we have decided (refer earlier) that the transcript of the evidence before the LPT and the subsequent published findings of the LPT are matters that we will take into account in the findings that we will ultimately make in this review. We note that the former President of the Tribunal, Davies J, in Re Letts and Secretary to the Department of Social Security (1984) 7 ALD 1 decided that the Tribunal, not being bound by the rules of evidence (refer s 33 of the AAT Act) could consider as evidence a transcript of the evidence of the applicant in a previous trial. We see no reason to depart from that principle and we reaffirm that we are obliged under s 290 of the Act to take account of “any inquiry or investigation that the applicant is or has been the subject of . . .” and “any disciplinary action that a professional association is taking or has taken against the applicant . . .”. (refer s 290(2)(e) and (f) of the Act).
340. The remaining issue of significance under s 290 of the Act is the giving of “immigration assistance” by a fit and proper person.
341. Section 276 of the Act discusses “immigration assistance” but does not define it. We doubt that there would be any controversy in the present circumstance that the applicant has and does use his knowledge of or experience in migration procedure to assist a visa applicant to prepare or help to prepare a visa application. Additionally we would be satisfied that the applicant has and does use his knowledge of and experience in migration procedure to prepare proceedings before a court or review authority in relation to a visa application (refer s 276(1)(a) and (c) of the Act).
342. In Re Lachmaiya and Department of Immigration and Ethnic Affairs (1994) 90 AAR 148 Deputy President McMahon decided that the word “assistance” refers also to the relationship between a migration agent and the relevant department and the assistance given in the administration of an immigration application. He considered that regard, frankness and truth were of primary significance. Deputy President McMahon decided that whilst primarily the obligation of a visa applicant was to observe standards of honesty and truthfulness it was more important for a migration agent to observe and practice the same standards (of honesty and truthfulness). These features he said were integral to consideration of fitness and integrity (also refer Re Peng and Department of Immigration and Multicultural Affairs (AAT 12543 19 January 1998).
343. Re Peng was discussed by Wilcox J in Lilienthal v Migration Agents Registration Authority (2002) 34 AAR 371 where at 375 His Honour concluded that in consideration of s 290(2) of the Act any enquiry into an applicant’s fitness and integrity is confined to soundness of moral principle and character, uprightness and honesty in the ambit of the migration work undertaken by the migration agent.
344. Once the conduct over which there is complaint is confined to conduct whilst acting as a migration agent, the authorities demonstrate that regard by other members of the same profession of that conduct is relevant. In Allinson v General Council of Medical Education and Registration (1994) 1 QB 751 it was decided that if a member of the medical profession had conducted himself in a manner which would be regarded as being “disgraceful and dishonourable by his professional brethren of good repute and competency” that it was open to the defendant to make a finding of “infamous conduct in a professional respect”.
345. In Pillai v Messiter (1989) 16 NSWLR 197 the Court of Appeal in NSW examined the statutory test of “misconduct in a professional respect” under the Medical Practitioners Act 1938. Kirby P, discussed the evolution (commencing with Allison) from the use of the words “infamous conduct” or “disgraceful conduct” or “infamous conduct in a professional respect” toward adoption of the words “misconduct in a professional respect” by an amendment to the NSW legislation in 1972. His Honour decided that the word “infamous” meant “no more than serious misconduct judged according to the rules written or unwritten governing the profession”. His Honour relied on some English authorities and ultimately concluded that “misconduct in a professional respect” included departure from accepted standards of practice and might also involve serious negligence, although not deliberate. It was decided that conduct of this type might display indifference or abuse of privilege of practice. Of course the facts surrounding the conduct giving rise to the application for deregistration must be examined and discretionary powers if available must be applied. In Pillai the appellant was a medical practitioner who, together with others, failed to observe that a drug was mistakenly administered to a patient which caused eventual death. His Honour noted that the error was isolated and the circumstances of administration of the drug were “convincingly explained”. His Honour concluded that “mistakes can happen to the most conscientious professional person”. It was found that there was nothing more than “mere negligence” by civil standards and no useful purpose would be achieved by removing the appellant from the register of medical practitioners.
346. In the course of his analysis of prevailing professional standards, Kirby P, also discussed the consequences of a finding of misconduct against a professional person. His Honour acknowledged that there would be a “drastic consequence” if an affirmative finding was made but ultimately decided at page 201 that such a finding:
. . .is not punishment of the practitioner as such but protection of the public. The public needs to be protected from delinquents and wrong-doers within professions. It also needs to be protected from seriously incompetent professional people who are ignorant of basic rules or indifferent as to rudimentary professional requirements. Such people should be removed from the register or from the relevant roll of practitioners, at least until they can demonstrate that their disqualifying imperfections have been removed.
Refer also Australian Securities Commission v Kippe (1996) 137 ALR 423 at 431; Re De Vere and Migration Agents Registration Board [1998] AATA 767;Re Griffiths and Migration Agents Registration Authority [2002] AATA 247).
CONCLUSION AND REASONS FOR DECISION
347. MARA made four decisions which are under review in these proceedings. The fourth decision made was the decision by MARA to cancel the registration of Mr Woods as a migration agent. In our review of that decision we would need to be satisfied that one or more of the other decisions under review should be affirmed.
348. The second decision under review can be rapidly dealt with because we are satisfied for reasons which will follow that it should be set aside. That was the decision that “an individual related by employment to the agent was not a person of integrity within section 303(g) of the Act”.
349. The “individual related by employment” was not identified by that decision or by the reasons for the decision published by MARA. It seems to us that the only relevant persons that could be described as being “an individual” for the purposes of this review were Huang or Wu or Mr Geary.
350. We have recited the relevant legislation earlier particularly s 278 of the Act which assists in the interpretation of the expression “related by employment”.
351. We are not satisfied that Huang was an employee of Mr Woods or Law Partners. The word “employee” and “employed” variously appears within s 278 of the Act but is not defined. Therefore, applying the commonly understood meaning to be given to the word “employee” we are satisfied that such a person provides a contract of service to an employer. In return the employer agrees to employ the employee. Traditionally a feature of employment is the payment of regular remuneration to an employee by an employer of wages. In the present circumstance Huang was engaged as a consultant and was paid certain fees and other monetary incentives. MARA did not regard him as an employee (refer T documents page 22). The LPT found as a fact that Huang was not an employee (refer LPT reasons for decision page 8-103 of T documents).
352. The other person we have referred to is the person Wu. It appears that he was engaged by Huang as his assistant. There is nothing that indicates that Wu was an employee of Mr Woods or Law Partners. Indeed Mr Woods was unable to adequately (or at all) explain the role of Wu other than as an assistant to Huang. Accordingly we are satisfied that Wu was not related by employment to Mr Woods or Law Partners.
353. The only other relevant person that could be contemplated by this particular decision was Mr Geary. He was not an employee of Mr Woods or Law Partners. He and Mr Woods were the proprietors of the incorporated legal practice trading as Law Partners. We could only envisage Mr Geary being regarded as being “related by employment” to Mr Woods or Law Partners if there was evidence that both Mr Geary and Mr Woods were “members of the same partnership” (refer s 278(c) of the Act). There is however no evidence of a partnership between Mr Woods and Mr Geary. Accordingly we are satisfied that this decision must be set aside.
354. We note, in conclusion of this part, that the Migration Regulations, as amended in 2002 and 2003, at Part 2, Division 2.1 refers to the “Assistance given by employers and their employees”. At Regulation 3B, the “employment” of persons as defined, has a broad application, and contemplates a relationship between persons extending beyond the traditional concept of “employment”. For the purposes of this part of our conclusions we have not had regard to those Regulations because:
(i)they were not in force at the time of the conduct in 1998 and 1999 giving rise to this review; and
(ii)there is nothing in the amendments indicating any retrospective operation; and
(iii)the decision we ultimately have made is not dependent on the decision by MARA, made under s303(g) being affirmed.
355. A review of the evidence heard in these proceedings and the evidence of the LPT and also upon a review of our findings of fact and the multitude of documents lodged has caused us to conclude to our reasonable satisfaction that Mr Woods is not a fit and proper person to give immigration assistance.
356. We note that Mr Woods did not encourage or recommend that his clients obtain independent legal advice prior to signing the shareholders’ agreement on 20 November 1998 nor did he satisfy himself whether his clients had obtained that advice. He did not advise his clients of the potential of a conflict of interest nor did he withdraw as the solicitor or agent for his clients when he either did or should have known that he had a conflict of interest. That Mr Woods was loath to admit and on some occasions failed to acknowledge that he was in conflict of interest with respect to his interest in Hu Fu and as to potential profits is of considerable concern to us. His failure also to provide competent and timely interpreting assistance to his clients at all relevant times was a significant failing in his professional responsibility. We note that he failed to register a debenture despite written documents drafted by him recording that he would attend to this and having represented to his clients that a registered debenture would give them security. We note that Mr Woods sought to dilute or explain away his failure to lodge the debenture and we are concerned that he may not understand the significance of honouring undertakings to clients or ensuring that their interests are properly protected. We note that Mr Woods learnt on 23 November 1998 – three days after the shareholders’ agreement that the City Paragon Café purchase was unlikely to be viable and the purchase price was unrealistic yet despite recording these comments in a memorandum to other persons in his office, he did not give this advice to his clients nor send a copy of the memorandum to them. We are satisfied that Mr Woods failed to properly represent his clients with respect to the City Paragon Café purchase and we are also satisfied that Mr Woods failed to inform himself as to the adequacy of the purchase. We note that he said in evidence that the contract for purchase was prepared outside his knowledge and that the clients signed the contract without his knowledge. However he failed to ensure that a due diligence examination was carried out, he allowed his clients to continue in the false belief (because of negligent advice) that they were denied the opportunity to escape the contract under the cooling off period and he continued to write letters disguising the perilous nature of the transaction and purporting to report on work that was being undertaken in anticipation of settlement of the purchase.
357. On 22 January 1999 Mr Woods wrote to his clients confirming settlement but purporting to report his “fears” that he alleged had been “expressed” on several prior occasions. This was false. The letter describes the “deal you have organised is an absolute shocker” (paragraph 75 earlier). The letter concluded by Zhai and Chang being asked to release Law Partners – of which he was the principle proprietor – from all or any liability associated with the purchase and agree not to make any complaint to a number of professional bodies. The clients were asked to keep secret all dealings concerning the transaction and when the clients eventually sought legal assistance elsewhere, Mr Woods exercised a lien over a number of important documents. We note that many letters forwarded to the clients contained false information and the letter of 22 January 1999 (refer above) is an example. We note the LPT in its findings concluded that the contents of the letter of 22 January 1998 amounted to “misconduct at common law in that it was conduct which would reasonably be regarded as disgraceful or dishonourable by solicitors of good repute and competency” (T documents Vol 1 page 197).
358. In general terms we note that Mr Woods did not call any persons in the proceedings before this Tribunal that may have assisted him. Despite his frequent references to the successful nature of his immigration practice not one client – past or present – was called as a witness in support of his fitness, propriety and integrity as a migration agent. Many witnesses were called who spoke of the personal attributes of Mr Woods. However this enquiry concerns the attributes of Mr Woods’ character as a migration agent. We are obliged to consider his fitness and integrity by reference to whether there was soundness of moral principal and character, uprightness and honesty (refer Re Peng; Re Lachmaiya; Lillienthal). We would also observe, in conclusion, that if Mr Woods sincerely believed that his practice was of such a repute that his clients returned on “two or three occasions” (paragraph 41), surely some of them could have given evidence with respect to his conduct as a migration agent. His explanation for not calling clients, found at paragraph 322, is not compelling. It is his professional reputation that is the subject of this part of the review and he has chosen or omitted to call persons who have previously engaged him in migration applications.
359. An issue that did emerge in these proceedings was whether the duties and responsibilities owed by migration agents to their clients were any different to those duties and responsibilities owed by lawyers. We think not. We have concluded, having regard to the objectives of the Act, the intention of the Parliament as evident by the Minister’s speech upon introduction of the Act, the numerous decisions of superior courts referring to the vulnerability of migration applicants and the duty generally of a professional seeking reward and – not insignificantly – the prescription of a Code of Conduct applicable to migration agents –that the standard of conduct of migration agents are no less than the standard of conduct owed by lawyers. We are particularly troubled – particularly in the context of this present enquiry into the fitness, propriety and integrity of Mr Woods to practice as a migration agent and to give immigration assistance – that he sought to lessen the responsibility of migration agents by referring to the limited nature of training and qualification compared to the educational and training requirements of lawyers.
360. We also take a considerably dim view of the reliance by Mr Woods on a number of documents that he produced shortly prior to the commencement of the hearing purporting to be an unsworn Affidavit that he had hoped that Zhai would execute. This document is referred to earlier in these reasons (paragraph 90). We indicated when we agreed to receive the document into evidence that it was unlikely that any weight could be attached to it unless more was known. More is known as a result of the evidence but it does not assist Mr Woods. We regard the contents of the Affidavit – as drafted by him – when considered in the light of the evidence heard in these proceedings to demonstrate not only a lack of integrity but demonstrates also the failure by Mr Woods to accept responsibility for his conduct. The Affidavit purports to have Zhai agree – if he were to sign it – that all blame and fault associated with the City Paragon Café purchase should be visited upon Huang (which would be partly correct) but concludes that the “First Appellant” (Mr Woods) was not aware of the City Paragon Café purchase “until well after the deal was done and given those circumstances acted honourably and did his best to rectify the position”. Mr Woods was aware of the City Paragon Café purchase within a matter of days of the contract being executed. He thereafter agreed to let his clients enter into a shareholders’ agreement without encouraging them to obtain independent advice and failed to satisfy himself that independent advice had previously been obtained. He also failed to obtain the services of a competent interpreter. He did not advise of the potential of conflict of interest. He became aware within a matter of days of that meeting of the perilous nature of the transaction yet failed to notify his clients. He thereafter failed to properly keep his clients informed of the work being undertaken preparatory to settlement on 15 January 1999 and on 22 January 1999 he sought to be relieved of all liability by seeking to have his clients release him in writing. When his clients eventually sought other legal advice he exercised a lien over some documents. This is not the conduct of a person who “acted honourably” nor does it indicate to us that Mr Woods “did his best to rectify the position”.
361. Mr Woods said in evidence that Zhai did not execute the Affidavit despite him travelling to China for this purpose. He said he understood that Zhai would sign it but when he arrived he learnt that Zhai wanted payment of compensation before he was prepared to execute the Affidavit. We only have Mr Woods’ evidence on this point. Zhai was not called to give evidence nor was any proof of his evidence lodged in the proceedings. He did not give evidence at the LPT. There is nothing to indicate that the draft Affidavit was prepared upon Zhai’s instructions or arising out of consultation with him. What is certain however is that the document was drafted by Mr Woods. That he would have a clause within the agreement indicating that he acted “honourably” and “did his best to rectify the position” is not only false but if they were beliefs generally held by Mr Woods it would be a further indication to us that he is not a fit and proper person nor possessing integrity of a standard sufficient to qualify for registration as a migration agent. We are of the view that no person, acting honourably and honestly, would attempt to have a client sign a document that was patently false. We are not surprised that Zhai did not sign it. In the alternative (the following being a scenario we think is most unlikely) if Mr Woods did receive instructions from Zhai to draft the affidavit in the form received into evidence, why was Zhai not called? Mr Woods would have achieved some benefit from a person who, having lost approximately $100,000, regarded his lawyer and migration agent as having acted “honourably” and “did his best to rectify the position”. Mr Woods submitted (paragraph 30) that we should take account of the “evidence” of Zhai as manifesting in the contents of the affidavit. This proposition is absurd. When the circumstances of the draft unsworn affidavit is considered, particularly the circumstances of its creation, we cannot give the document the status of “evidence”.
362. The role of Huang must also be examined in the context of the applicant’s propriety, fitness and integrity. We have found earlier that Huang was not an employee. It is our belief however that he is a member of “staff” within the meaning of cl 8.2 of the Code of Conduct. It is our belief for reasons which will shortly follow that there was a failure by the applicant to properly supervise the work of Huang. The word “staff” is not defined by the Act or the Code of Conduct but it clearly in our view captures all persons who are engaged by a migration agent whether they be employees or working under a contract for service. It is inconceivable that migration agents would be permitted to engage persons upon contract – as apparently was the case with Huang – yet not be liable for the consequences of the actions of such contracted persons. Even in the absence of this issue we have no doubt that the applicant did fail to exercise the duty he owed as a migration agent to effectively control his office (refer cl 8.1 and cl8.2 of Code of Conduct) by allowing Huang to act in the manner that he did as a contracted person.
363. On the one hand, Mr Woods described Huang (inter alia) as “the Chinese business manager”, “Cultural representative” and being required to “develop Chinese markets for Law Partners” (paragraph 116). These descriptions suggest a person of some integrity, trust and highly respected. However, at paragraph 45 he was described as “not overly skilled” and “when it came to detail he went missing”. A different opinion of Huang’s attributes might be gleaned by these latter descriptions. That Mr Woods would engage a person who was not overly skilled and lacked detail satisfies us that if he is to be engaged, he should have been thoroughly supervised and controlled. As we have learnt, this did not occur.
364. Our examination of the conduct and behaviour of Huang in the City Paragon Café purchase satisfies us that Huang induced and coerced Li – on behalf of Zhai – to cease instructing Wang and to give instructions to Law Partners. On that basis the representation included advice that Huang himself would principally conduct all necessary work but under the supervision of Mr Woods. Huang made arrangements with Li on behalf of Zhai to enter into a shareholding agreement where Law Partners Far East Pty Ltd would be a shareholder but did not disclose that he was a shareholder in that company and could thereafter obtain a benefit. He knew that Li signed Zhai’s signature on a number of occasions and encouraged her to do so. He did not encourage Li – and later when he first met Zhai - to obtain independent legal or accountancy advice nor did he arrange for independent interpreting. He encouraged Zhai to enter into a business purchase to satisfy a sub-class 457 visa application but did not advise that such an application needed to be made offshore. Huang coerced the clients to sign blank cheques on the Hu Fu cheque account and then drew cash of approximately $90,000. There are references within the LPT transcript to those funds being paid to the vendors of the City Paragon Café. We are distinctly uncomfortable with these cash transactions. We are very concerned about the involvement of Huang in the contract of purchase, the advice given as to signing and later signing an amended contract and allowing Zhai and Chang to continue to act towards completion of the purchase knowing that incorrect and negligent advice had been given. If competent advice had been given, the clients would have been able to avoid the contract under the cooling off period permitted by the contract.
365. Much was heard from Mr Woods in these proceedings concerning his business and administrative acumen, his preparedness to take risks and be innovative in practice and the methods implemented concerning office procedure and conduct. We heard much about automated and electronic systems – including file retrieval systems, frequent staff meetings, goal setting and office manuals. In our view all of this counts for nothing if Mr Woods is either unable to know what his staff are doing within the office or these systems failed to inform him of the work being undertaken by his staff. Additionally there is much to suggest that Mr Woods failed to satisfy himself about the work being undertaken by Huang. We would prefer to think that if Mr Woods had exercised appropriate control, diligence and observation of Huang that Zhai and Chang would not have ever entered into the City Paragon Café purchase without competent and thorough inquiry into the viability of the business, a sound and properly drafted contract and a due diligence examination being carried out. We also note that Mr Woods continued to engage Huang as a contracted person for some time after the disasters which commenced in September 1998 when we would have thought it would be appropriate for a person of fitness, propriety, and integrity to immediately dismiss him, such was the disgraceful and dishonourable conduct that he displayed.
366. The person Wu seemed to have unrestricted access to the Law Partners office in September 1998, apparently under the supervision and control of Huang. Mr Woods was vigilant to have us understand that Wu was never an employee or under a contract to Law Partners and sought to be relieved of any obligation arising out of Wu’s conduct. If that was so, it causes us further concern towards the fitness of Mr Woods as a migration agent because apparently he allowed Wu to attend his office and potentially have access to files of other persons, but significantly, give advice or make representations to Zhai and Chang either on his own account or instruction of or in concert with Huang. So far as we are aware – and there is no evidence to suggest otherwise – Wu was not a lawyer and not a migration agent.
367. Having regard to the foregoing and by reference to the authorities summarised earlier we are not satisfied that the applicant is a fit and proper person to give immigration assistance nor is he a person of integrity.
368. We are satisfied that improper conduct has occurred, we cannot assume that it will not occur again and we certainly are of the opinion that the general community would not have confidence that it would not again occur (refer Bond). We are of the view that potential visa applicants could not have confidence that the applicant possesses the degree of fitness, propriety and integrity to give immigration assistance as was envisaged by the Parliament (refer Second Reading Speech).
369. In making these findings we have also concluded that the work associated with the City Paragon Café purchase was inherently linked to the visa application which Mr Zhai sought to make. It follows therefore that the City Paragon Café purchase and the financial arrangements associated with it comes within the realm of “immigration assistance”. Zhai needed to acquire a business in order to qualify for a sub-class 457 visa. The purchase by him of the City Paragon Café was meaningless in the absence of ultimately acquiring a sub-class 457 visa. The Business and Retainer Agreements drafted by Mr Woods were specifically targeted to overseas persons who sought a residence in Australia under a visa which required those persons to demonstrate a connection with Australia by investment or business acquisition.
370. In our view the first decision under review should be affirmed and that decision alone would be sufficient to cause the fourth decision, namely cancellation of registration, to be affirmed.
371. Consideration of the decision with respect to non-compliance with the Code of Conduct would in our view only reinforce the decision to cancel registration because we are satisfied under cl 2.1 that Mr Woods did not act at all times in accordance with the law and with the legitimate interests of his clients or deal with them competently, diligently, fairly and without conflict of interest. At this stage we pause to comment that we reject the submission put to us that we should distinguish between actual and potential conflict of interest. It would be our view that a conflict of interest, whether it be actual or potential should not only be notified to the client but that the agent should not allow such conflicts to exist that would affect the legitimate interests of the clients. We found Mr Wood’s difficulty in recognising any wrong doing towards his clients remarkable, given the resemblance the relationship had to a fiduciary relationship. He was working on behalf of Zhai and Chang who retained and relied upon Mr Woods for his migration expertise, (see Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 96-7). Avoiding a conflict of interest is a fundamental rule of fiduciary relationships (see Chan v Zacharia (1984) 154 CLR 178). Mr Woods, especially because of his legal qualifications and duration of legal practice should have been alive to the sensitivities of the relationship.
372. We trust that it is evident from our earlier comments that cl 2.4 of the Code of Conduct could not be satisfied. It is apparent to us that Mr Woods did not have due regard to the dependence his clients had on his knowledge and experience. Mr Woods has also failed cl 3.6 because he did not ensure that his clients had access to an interpreter which was at all times necessary. For the reasons given earlier there has been a breach of cl 8.1 and cl 8.2 of the Code of Conduct because Mr Woods did not exercise effective control over his office for the purpose of giving immigration advice and assistance nor did he properly supervise the work carried out by his staff.
373. In all of the circumstances we are satisfied that the fourth decision under review should be affirmed and his registration as a migration agent should be cancelled.
I certify that the 373 preceding paragraphs are a true copy of the reasons for the decision herein of
Mr J Handley, Senior Member
Associate Professor J Maynard, MemberSigned: Holly Weston
AssociateDates of Hearing 5 to 12 May 2003
Date of Decision 11 May 2004
Solicitor for the Applicant Self Represented
Counsel for the Respondent Mr D Star
Solicitor for the Respondent Australian Government Solicitor
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