FEDERAL COURT OF AUSTRALIA Kazacos v Migration Agents Registration Authority [2007] FCA 1573 PARRIS KAZACOS v MIGRATION AGENTS REGISTRATION AUTHORITY AND ADMINISTRATIVE APPEALS TRIBUNAL NSD 271 OF 2007 ALLSOP J 15 OCTOBER 2007 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 271 OF 2007 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY BETWEEN: PARRIS KAZACOS Appellant AND: MIGRATION AGENTS REGISTRATION AUTHORITY First Respondent ADMINISTRATIVE APPEALS TRIBUNAL Second Respondent JUDGE: ALLSOP J DATE OF ORDER: 15 OCTOBER 2007 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application be dismissed 2. The applicant pay the respondents' costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 271 OF 2007 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY BETWEEN: PARRIS KAZACOS Appellant AND: MIGRATION AGENTS REGISTRATION AUTHORITY First Respondent ADMINISTRATIVE APPEALS TRIBUNAL Second Respondent JUDGE: ALLSOP J DATE: 15 OCTOBER 2007 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is an appeal under s 44 of Administrative Appeals Tribunal Act 1975 (Cth) (the "AAT Act") raising questions of the proper construction of clauses of the Code of Conduct (the "Code") made under reg 8 of the Migration Agents Regulations 1998 made under the Migration Act 1958 (Cth). 2 The Administrative Appeals Tribunal (the "Tribunal") was exercising a review of a decision of the Migration Agents Registration Authority ("MARA"), under which the applicant had been suspended as a migration agent for a minimum of six months, and under which conditions had been imposed on the applicant that were required to be fulfilled before the lifting of the suspension. 3 The Tribunal dealt with complaints in respect of the affairs of three people: a Mr Williamson, a Mr MacDonald and a Ms Adams. The errors of law in the construction of the Code are said by the applicant to attend the Tribunal's approach to the complaints concerning Mr MacDonald and Ms Adams. 4 The Code has been amended from time to time since its initial promulgation. The general scheme of the Code, set against the background of the regulation of migration agents, is to regulate their conduct for the benefit and protection of the public. By the Migration Act, s 303, MARA is given the authority to discipline migration agents for, amongst other things, non-compliance with the Code. Of course, the approach to the construction of the delegated legislation should recognise the serious consequences for the migration agent of a finding of misconduct. In that sense the provisions can be described as penal: Hanna v Migration Agents Registration Authority (1999) 94 FCR 358 at 363. However, as I said in Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd [2006] ATPR 42-123 at [45]-[48], the meaning of a penal provision is to be ascertained using the ordinary rules of statutory construction and interpretation, but recognising that if, as a matter of last resort after those rules are applied, the language of the statute remains ambiguous or doubtful, such ambiguity or doubt may be resolved in favour of the subject. What is to be rejected is an approach which, because the provision is penal, employs a literal analysis with an eye to the discernment of textual ambiguity through finely spun distinction: see also Pearce DC and Geddes RS, Statutory Interpretation in Australia (5th ed, Butterworths, 2001) at p 232 [9.8]. 5 Before turning to the provisions of the Code, a number of features of the Migration Act should be noted. First, only individuals may be registered as migration agents under Part 3 of the Migration Act: see s 286. Thus, the Code in its prescription of conduct is directed to people, not companies. 6 Secondly, the Migration Act does contemplate that a migration agent may work as an employee or officer of a corporation, or employee or partner of a partnership. The Migration Act, s 312 sets out the obligations of a migration agent to notify MARA of various events within 14 days of their occurrence, including the following in paragraph (f), (fa), (g) and (h): s 312 Notification obligations (1) A registered migration agent must notify the Migration Agents Registration Authority in writing within 14 days after any of the following events occurs: … (f) he or she becomes an employee, or becomes the employee of a new employer, and will give immigration assistance in that capacity; (fa) he or she becomes a member of a partnership and will give immigration assistance in that capacity; (g) if he or she is a member or an employee of a partnership and gives immigration assistance in that capacity--a member of the partnership becomes bankrupt; (h) if he or she is an executive officer or an employee of a corporation and gives immigration assistance in that capacity: (i) a receiver of its property or part of its property is appointed; (ii) it is placed under official management; (iii) it begins to be wound up. The phrase "immigration assistance" is defined in the Migration Act, s 276 to include a range of activity including the preparation of a visa applications, advice, preparing for court or review authority proceedings and using or purporting to use knowledge or experience in migration procedure, being the law and administrative practice relating to immigration. 7 The Migration Act, ss 280 and 281 provides for restrictions on the giving of immigration assistance and on charging fees for immigration assistance. With certain listed exceptions, a person who is not a registered migration agent must not give immigration assistance: s 280(1). The terms of s 281 are as follows: s 281 Restriction on charging fees for immigration assistance (1) Subject to subsection (3), a person who is not a registered migration agent must not ask for or receive any fee or other reward for giving immigration assistance. Penalty: Imprisonment for 10 years. (2) Subject to subsection (3), a person must not ask for or receive any fee or other reward for the giving of immigration assistance by another person who is not a registered migration agent. Penalty: Imprisonment for 10 years. (3) This section does not prohibit: (a) a lawyer from asking for or receiving a fee for giving immigration legal assistance; or (b) a person from asking for or receiving a fee for the giving of immigration legal assistance by a lawyer. (4) A person is not entitled to sue for, recover or set off any fee or other reward that the person must not ask for or receive because of subsection (1). 8 Section 281(1) prohibits the asking for or receiving a fee or other reward for giving (by the person or company) immigration assistance. That can be seen by the terms of s 281(2) which concern the asking for or receiving a fee or other reward for giving (by another – who must be a registered migration agent) immigration assistance. This is confirmed by the structure and content of s 281(3). So, it is lawful for a company to ask for or receive a fee or reward for the giving of immigration assistance by an employed migration agent. 9 Part 7 of the Code deals with financial duties of migration agents. As at 1 March 2003, Part 7 was comprised of clauses 7.1-7.7 which were in the following terms: 7.1 A migration agent must keep separate accounts with a financial institution for: (a) the agent's operating expenses (the operating account); and (b) money paid by clients to the agent for fees and disbursements (the clients' account). 7.2 A registered migration agent must hold, in the clients' account, an amount of money paid by a client for an agreed block of work until: (a) the agent has completed the services that comprise the block of work; and (b) an invoice has been issued to the client for the services. 7.3 The agent may, at any time, withdraw money from the clients' account for disbursements that are required to be paid to the Department, or any other agency, for the client. 7.4 A migration agent must keep records of the clients' account, including: (a) the date and amount of each deposit made to the clients' account, including an indication of the purpose of the deposit and the client on whose behalf the deposit is made; and (b) the date and amount of each withdrawal made in relation to an individual client, and the name of each recipient of money that was withdrawn; and (c) receipts for any payments made by the client to the agent; and (d) copies of invoices or accounts rendered in relation to the account. 7.5 A migration agent must make available for inspection on request by the Authority: (a) records of the clients' account; and (b) records of each account into which money paid by a client to the agent for fees and disbursements has been deposited. 7.6 If a migration agent provides a service to a client on the basis of a conditional refund policy, a 'no win, no fee' policy or an undertaking to similar effect: (a) the agent must have sufficient funds available to be able to cover any amount that the agent may become liable to pay to the client under the policy or undertaking; and (b) the agent must meet that obligation by: (i) keeping funds in the clients' account; or (ii) keeping a security bond; or (iii) maintaining adequate insurance. 7.7 Nothing in clause 7.1, 7.2, 7.3, 7.4 or 7.6 affects the duty of a migration agent, who is also a legal practitioner and who acts in that capacity, to deal with clients' funds in accordance with the relevant law relating to legal practitioners. 10 Amendments were made thereafter, but cl 7.2 remained the same in substance. 11 One can see that these obligations may or may not, in any given context, be relevant to a migration agent who works entirely as an employee. If such a person had no part in liaising with clients, with receiving funds, with the operation of the practice or with controlling the bank accounts, it may well be that such obligations do not affect the daily working professional life of such a person. 12 Equally, one can see a need for an express regime whereby the duties as are found in Part 7 are placed on persons (including companies) who employ migration agents and who (lawfully) ask for or receive fees or reward for the giving of immigration assistance by employed registered migration agents. 13 The interposition of the corporate form is at the centre of the applicant's arguments in this case. 14 Part 10 of the Code deals with the termination of services. Below is the form of Part 10 from March 2003 to May 2005 with two forms of cl 10.4 (one at March 2003 and another from at least July 2004) and with cll 10.1A and 10.1B (from at least May 2005): 10.1 A registered migration agent must complete services as instructed by a client unless: (a) the agent and client agree otherwise; or (b) the client terminates the agent's instructions; or (c) the agent terminates the contract for just cause and gives reasonable written notice to the client. 10.1A For paragraph 10.1(c), a written notice must state: (a) that the agent ceases to act for the client; and (b) the date from which the agent ceases to act; and (c) the terms of any arrangements made in respect of appointing another registered migration agent. 10.1B Within 7 days of giving the written notice, the agent must: (a) update the client's file to reflect the current status of each case or application undertaken by the agent for the client; and (b) deliver all documents to which the client is entitled to the client or to the appointed registered migration agent; and (c) ensure that all financial matters have been dealt with as specified in the contract. 10.2 A client is entitled to ask a registered migration agent (orally or in writing) to return any document that belongs to the client. The agent must return the document within 7 days after being asked. 10.3 Australian passports, and most foreign passports, are the property of the issuing Government and must not be withheld. 10.4 (at March 2003) A migration agent must not withhold a document that belongs to a client by claiming that the agent has a right to withhold a document by a lien over it. 10.4 (from July 2004) A registered migration agent must not withhold a document that belongs to a client, as part of a claim that the agent has a right to withhold a document by a lien over it, unless the agent holds a current legal practicing certificate issued by an Australian body authorised by law to issue it. 10.5 On completion of services, a registered migration agents must, if asked by the client, give to the client all the documents: (a) given to the agent by the client; or (b) for which the client has paid. 10.6 If the client terminates the instructions, a registered migration agent must take all reasonable steps to deliver all documents quickly to the client or any other persons nominated by the client in writing. If the agent claims a lien on any documents, the agent must take action to quantify the amount claimed and tell the client in a timely manner. Note 1Only registered migration agents who hold a current legal practising certificate issued by an Australian body authorised by law to issue it are able to claim a lien on any client documents. 15 Once again, in any given circumstances some of these clauses may not apply to an individual migration agent who does not act as a principal. 16 The applicant put the bald proposition that clauses 7.2, 10.2, 10.4 and 10.6 cannot apply a migration agent who is an employee. Such a broad proposition is not, in my view, able to be made. The individual facts and circumstances may make any one or more of them relevant to an agent's position. For this reason, it is necessary to examine the approach of the Tribunal to the facts before it. 17 The facts as found by the Tribunal were as follows: (1) The applicant was a registered migration agent. (2) On 1 February 2000, a company, Parris & Shah Pty Ltd was incorporated, with the applicant and one Hemang Shah as shareholders and directors. At the time of the Tribunal hearing, and at all relevant times, the applicant was the sole director and shareholder of the company. (3) The company has traded under two business names: Parris & Shah Migration Specialists and Australian Migration Specialists, using those names indiscriminately. (4) No finding was made by the Tribunal that the applicant was an employee of the company. No part of the reasons of the Tribunal rejects any submission that he was an employee. No complaint is made that any evidence or aspect of the facts was ignored by the Tribunal in this respect. (5) The Tribunal made a finding (see [16] of its reasons) that the Applicant was engaged by the complainants (at least Mr Wilkinson and Mr MacDonald) as their agent. Similarly [17] contains a finding that these persons wished to engage "his services" and "would be transferring the required fees". (6) The Tribunal recognised that the fees had been paid to the company, saying at [18] of its reasons: Similar comments can be made regarding the refusal to refund fees to Messrs Wilkinson and MacDonald. Although the Applicant sought primarily to rely upon the payment of fees to Parris & Shah Pty Ltd and not him personally, it seems to me that once the complainants had terminated the Applicant's engagement to act on their behalf they were no longer clients. This contains a finding of fact that Messrs Wilkinson and MacDonald had retained the applicant as agent. (7) The Tribunal addresses the question of the place of the company in [20] of its reasons: The attitude of the Applicant towards refunds to former clients is clearly set out in his letter to the Respondent dated 26 January 2006, referring to Mr Wilkinson's claim. He stated: "No refund. I personally have no power to offer a refund in this matter. A decision was taken by Parris & Shah Pty Ltd on the basis of the information before it not to offer a refund. There was a fundamental issue of Parris Kazacos having worked with Parris & Shah Pty Ltd for many years and the money grab for a refund by Mr Wilkinson. I do not wish to be held personally responsible for the decision not to refund. This is a purely commercial matter between Parris & Shah Pty Ltd and Mr Wilkinson that should be addressed elsewhere." This is of course quite ingenuous as at all relevant times the Applicant was the sole Director of and shareholder in Parris & Shah Pty Ltd. This paragraph contains the factual conclusion of complete identity of interest of the company and the applicant. (8) Though not directly in issue, the history of the creation of the retainer by Mr Wilkinson and its treatment by the Tribunal is important. It is clear from the passages to which I have earlier referred and [28] and [29] of the reasons that the Tribunal concluded that the retainer was made with the applicant, notwithstanding the involvement of the corporate form. That was a factual conclusion. (9) The Tribunal found Mr MacDonald to have retained the applicant, see the background of Mr Wilkinson found to be "similar": [31], the "relationship"; [36], "while acting for Mr MacDonald": [38]. (10) The Tribunal found that the applicant acted for Ms Adams: [44]. This was a finding that, as with Mr Wilkinson and Mr MacDonald, the retainer was between the client and the applicant. (11) The applicant being the person retained by the client (so found) requested the clients to pay fees to the company: [40]. This was not a finding contradictory to the finding that the retainer was of the applicant, but that he, as the migration agent retained by the client, requested that the fees due to him be paid to the company. 18 It is against the background of these facts that one must assess the asserted breaches of the Code. Mr MacDonald 19 In [31]-[35] the Tribunal described the work done for Mr MacDonald and the breakdown in the relationship between him and the applicant. The Tribunal found a breach of clause 10.2 and expressed this in [36] and [37]: [36] Following the breakdown in the relationship between Mr MacDonald and the Applicant, Mr MacDonald requested the return of his documents and a refund of fees. Some documents were returned but in the initial return other documents were omitted. [37] Notwithstanding follow-up emails by Mr MacDonald it was not until much later, namely 25 June 2005, that the missing documents were returned to Mr MacDonald. Quite clearly the return of the documents was well outside the seven days required by Clause 10.2 of the Code of Conduct. Although the Applicant attributed responsibility to a staff member, the responsibility to return the documents is the agents and cannot be evaded by attempting to blame employees. 20 Taken with the finding elsewhere (see especially [38] of the reasons) that the retainer was between Mr MacDonald and the applicant, these findings were plainly open and do not reflect any legal error by ignoring corporate form. The applicant submitted that [50] and [51] of the Tribunal's reasons reflect fundamental error in the legal approach to the applicant's position. There the Tribunal stated: [50] Although this is not the case in which to define the relationship between a Migration Agent and an incorporated practice, suffice it to say that the Applicant was the mind and controlling body of Parris & Shah Pty Ltd. The Code of Conduct places responsibilities upon the Applicant personally and there is no evidence whatsoever that the Applicant took any steps to comply with Clause 10.2. To my mind it is no answer to the personal obligations placed upon the agent to state that some other person or body has the documents. If that is the case then it is the agents responsibility to obtain the said documents. [51] This responsibility is even more pronounced where, as in this case, the agent is to all intents and purposes one and the same as the body corporate who he claims has possession. In particular, I refer to the Applicant's email of 7 April 2005 to the complainant in which he states: "I require my fees to be paid…" (Tribunal's emphasis) 21 These are matters of fact that were no doubt relevant to the Tribunal in its findings that the retainers with the clients were made with the applicant, not his corporate alter ego. 22 The complaints by the applicant of legal error in the Tribunal fail because of the tolerably clear approach by the Tribunal that as a matter of fact, notwithstanding the corporate form, which the Tribunal found the applicant had sought to employ to evade his obligations under the Code, the retainer was between the complainants and the applicant, that fees under that retainer were requested by the applicant to be paid to a third party (the company) and that documents were provided under that retainer, implicitly to him, even if they had been put into the custody of a third party (his corporate alter ego under his control). 23 As I understand the Tribunal's reasons these are its explicit and implicit findings. 24 In that context, the conclusions reached about cl 10.2 in respect of Mr MacDonald displayed no legal error. 25 As to the application of cl 7.2 of the Code the Tribunal said the following at [39]–[41] of the reasons: [39] The Respondent has found that the Applicant has breached Clause 7.2 of the Migration Agents' Code of Conduct in respect of Mr MacDonald. Clause 7.2 reads: "A registered migration agent must hold, in the client's account, an amount of money paid by a client for an agreed block of work until; (a) the agent has completed the services that comprised the block of work; and (b) an invoice has been issued to the client for the services." [40] Technically the Applicant has breached this Clause and Clause 7.1 in respect of each and every client who he has requested pay fees direct to Parris & Shah Pty Ltd. The Clause does not take into account the situation either of an incorporated practice or more importantly the situation of an employed Migration Agent. [41] As stated above, this is a technical breach and can only be taken seriously when the Respondent addresses the existence of Migration Agents in the employ of others including legal or accounting firms. 26 The recognition of the place of the company in the events is not, as the applicant sought to submit, part of a conclusion that the company was the entity retained. The balance of the reasons make clear that it was not retained. The applicant was. This being so, the breach was technical because the applicant, instead of complying with cll 7.1 and 7.2, directed the moneys from his client to a third party (his corporate creature). 27 There was no error in the Tribunal's treatment of cl 7.2 in relation to Mr MacDonald. The same conclusion applies to Ms Adams (the relevant facts as to accounts not being any different). 28 The balance of the facts concerning Ms Adams were in [44]-[49] of the Tribunal's reasons, as follows: [44] The facts pertaining to Ms Adams are quite simple. The Applicant was acting for her when she became dissatisfied with the level of service he provided including an allegation of over charging. As a result she withdrew her instruction from the Applicant. On 19 January 2005, the complainant requested her original FBI Police Clearance from the Applicant's files. On 7 April 2005, he replied to her stating inter alia: "I would like to reiterate my comments to you as follows: (1) I cannot provide you of anything of your file now. (2) I require my fees to be paid in full. You do not need to pay the fees for addressing the character matters. You simply need to pay for the works in relation to my time spent at immigration assisting you with your detention matter." [45] On 8 April 2005 the Applicant twice emailed the complainant. The first email timed at 2.11 pm read inter alia: "You terminated myself as your Agent and requested your file. I advise that I would find time to prepare your documents in the next couple of days. I have now been advised and I believe that you have also been advised that Parris & Shah Pty Ltd is holding your documents until the outstanding debts are paid to it." [46] A later email timed at 6.20 pm stated inter alia: "With regards to your documentation please be advised that Parris & Shah Pty Ltd are retaining your documentation until your outstanding debts are paid to the company. In accordance with the Migration Agents' Code of Conduct I am more than willing to provide you with your documentation as our relationship has been terminated by you. However the documents are in the possession of a company with whom you have contracted, that being Parris & Shah Pty Ltd." [47] By letter dated 8 April 2005 the complainant's solicitors wrote to the Applicant enclosing an Authority and requesting the complainant's file. In that letter the solicitors reminded the Applicant of the Migration Agents Code of conduct, Clause 10.6 which reads: "If the client terminates the instructions, a registered migration agent must take all reasonable steps to deliver all documents quickly to the client or any other person nominated by the client in writing. If the agent claims a lien on any documents, the agent must take action to quantify the amount claimed and tell the client in a timely manner. Notes: (1) Only registered migration agents who hold a current legal practicing certificate issued by an Australian Body authorised by law to issue it are able to claim a lien on any client documents. (2) …" [48] In a complaint made to the Respondent Ms Adam's solicitors stated: "When instructions were withdrawn we wrote to Ms [sic] Kazacosrequesting that he forward to us his file records and forward our client's authority together with a copy of the Form 956 that we had forwarded to the department. We enclose a copy of this letter. Mr Kazacos responded refusing to forward any documents until an outstanding account, which our client disputes, has been paid. He has not replied in writing. We have on several occasions requested Mr Kazacos to provide us with the documents, and in particular, the USA Police Report which he holds and which he was instructed to forward to the department. He has refused to do so. Our client's case is now held up pending the forwarding of this report." [49] When interviewed by an officer of the Respondent in relation to a complaint by Ms Adams, the following exchange took place: "Did Parrish Patience request the file from you? A: Yeah Q: And refused to give it over? A: Yeah Q: Why did you refuse that? A: I didn't refuse it, Parris & Shah refused it because they had funds outstanding Common Law lien, so like I said she handed the documents to Parris & Shah the company that was looking after her matter, OK. I have access to those files, those documents to do with her application, as you know." And then reiterated that Parris & Shah were relying upon a common law lien. 29 Not only does this clear statement place [50] and [51] of the Tribunal's reasons (see above) in context, it also demonstrates amply the legitimacy of the factual conclusion explicit and implicit in the Tribunal's reasons: that the retainer made by Ms Adams was with the applicant, that the fees under that relationship were his fees; and that documents were by Ms Adams sent under that arrangement, whoever may have had custody of them. 30 In the context of the Tribunal's factual findings and approach, no legal error was displayed. The applicant plainly had an obligation to return documents belonging to Ms Adams provided under the retainer with him. It was no answer to say that they were in the custody of his own corporate creature. There was no basis under cl 10.4 or 10.6 for a lien demonstrated. 31 In my view, the factual approach of the Tribunal removes any argument that it committed any error of law. The application will be dismissed with costs. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. Associate: Dated: 15 October 2007 Counsel for the Appellant: Mr D Jenkins Solicitor for the Appellant: Kessels, Goddard & Ajuria Counsel for the Respondent: Mr A McInerney Solicitor for the Respondent: DLA Philips Fox Date of Hearing: 24 April 2007 Date of Judgment: 15 October 2007