Minister for Immigration and Border Protection v Choong Enterprises Pty Ltd

Federal Court of Australia|2015-04-27|Before: Mansfield J

INTRODUCTION 1 The first respondent, Choong Enterprises Pty Ltd (Choong Enterprises) operates a number of restaurants and cafés at various locations in Darwin in the Northern Territory. For the purposes of operating those businesses, Choong Enterprises or Choong Import Export Pty Ltd as it was registered prior to 12 June 2009, sought and obtained approval to act as a sponsor pursuant to s 140E of the Migration Act 1958 (Cth) (the Act) and reg 1.20D of the Migration Regulations 1994 (Cth) (the Regulations). Between at least September 2009 and March 2012, the company acted as the sponsor of a number of citizens of the Philippines, who travelled to Australia on Subclass 457 visas and worked in its restaurants and cafés. 2 The Minister brings this proceeding for significant contraventions of the the Act and the Regulations in relation to the sponsorship obligations of Choong Enterprises during that period, and against Mr Ronald Kheong Huat Choong (Mr Choong), the sole director and shareholder of Choong Enterprises and Ms Kim Choong, Mr Choong's wife. 3 In the course of the management of the proceeding, the parties agreed upon most of the relevant factual allegations. Their Statement of Agreed Facts (SAF) provides the foundation for most of the findings recorded in these reasons for decision. The SAF, so far as it concerns matters alleged by the Minister, is also supported by the affidavit of Vikash Solonki of 12 February 2015 filed by the Minister. 4 As a result of the SAF, the respondents admitted the contraventions referred to in detail below, and the matter proceeded only on the question of the orders which should be made and on the question of the costs of the proceeding. 5 The orders made in relation to those matters are as set out in the orders section of these reasons at [80] below.

Regulation 2.79 14 The obligations of Choong Enterprises under reg 2.79 varied depending upon whether the nomination of the 457 Visa Holders was approved before or after 14 September 2009 as: (a) nominations approved before 14 September 2009 (six of the 457 Visa Holders) were between 14 September 2009 and 31 December 2009 subject to the minimum salary levels prescribed in reg 2.79(2A) and Minister for Immigration and Citizenship (Cth) Minimum Salary Levels for the Subclass 457 Temporary Business (Long stay) Visa, IMMI 09/109, 10 September 2009 (Instrument IMMI 09/109) made for the purposes of that regulation; and after 1 January 2010, subject to regs 2.79(2) and 2.79(3)(b)-(e) of the Migration Regulations; and (b) nominations approved after 14 September 2009 (four of the 457 Visa Holders) were subject to the guaranteed annual earnings approved at nomination, in accordance with reg 2.79(3)(a). 15 Choong Enterprises' nominations of four of its sponsored employees were approved before 14 September 2009 in accordance with reg 1.20GA, namely Ms Tangey, Mr Dumasig, Ms Sebastian and Mr Rodriguez. 16 Between 14 September 2009 and 31 December 2009, in order to meet the obligation in reg 2.79, Choong Enterprises had to ensure each of those employees received the applicable base salary (excluding superannuation) of $40,705 per annum (which was based on a 38 hour working week) (reg 2.79(2A) and IMMI 09/109 cl 2(3)). This equates to approximately $12,948 for this 16.6 week period; and as a matter of arithmetic a gross weekly salary of $780 and an hourly rate of $20.53 approximately; and an approximate net weekly salary of $659 and an hourly rate of $17.34. 17 Between 1 January 2010 and 11 March 2012, in order to meet the obligation in reg 2.79, Choong Enterprises had to ensure that each of these four employees received a base rate of pay (excluding superannuation) of $40,705 per annum based on a 38 hour working week (reg 2.79(3)(b)). This equates to an approximate gross weekly salary of $780 and an hourly rate of $20.53; and an approximate net weekly salary of $666 and an hourly rate of $17.53. (These figures come from the Minister's submissions, but it is not clear why the arithmetical outcomes differ from those in the preceding paragraph. A similar observation may be made about the figures in the next two paragraphs.) 18 Choong Enterprises' nominations of two of its sponsored employees were approved before 14 September 2009 in accordance with reg 1.20G namely Ms Gaitan and Mr Largado. 19 Between 14 September 2009 and 31 December 2009, in order to meet the obligation in reg 2.79, the Sponsor had to ensure each of these employees received an applicable base salary (excluding superannuation) of $45,220 per annum based on a 38 hour working week (reg 2.79(2A) and IMMI 09/109 cl 2(2)). This equates to approximately $14,392.20 for this 16.6 week period; and an approximate gross weekly salary of $867 and an hourly rate of $22.81; and an approximate net weekly salary of $716 and an hourly rate of $18.84. 20 Between 1 January 2010 and 11 March 2012, in order to meet the obligation in reg 2.79, Choong Enterprises had to ensure each of these two employees received a base salary (excluding superannuation) of $45,220 per annum based on a 38 hour working week (reg 2.79(3)(c)). This equates to an approximate gross weekly salary of $867 and an hourly rate of $22.81; and an approximate net weekly salary of $724 and an hourly rate of $19.05. 21 Choong Enterprises' nominations of the four of its sponsored employees who were approved after 14 September 2009 in accordance with s 140GB of the Act, namely Mr Aguilar, Mr De Leon, Ms Culion and Ms Enriquez, involves slightly different entitlements. 22 Choong Enterprises' nomination of each of these employees was approved on the basis that they would each receive a base salary (excluding superannuation) of $50,000 per annum, based on a 38 hour week. This is also referred to as the "guaranteed annual earnings" approved at nomination. 23 Accordingly, between 24 June 2011 and 11 March 2012, in order to meet the obligation in regulation 2.79, Choong Enterprises had to ensure each of these four employees' base salary (excluding superannuation) was $50,000 per annum based on a 38 hour working week. This equates to approximately $35,456 for this 37 week period; and an approximate gross weekly salary of $958 and an hourly rate of $25.22; and an approximate estimated net weekly salary of $784 and an hourly rate of $20.63. 24 For the duration of that same period, reg 2.79(2) stipulated that Choong Enterprises had to ensure that the terms and conditions of employment provided to these four 457 Visa Holders were "no less favourable than the terms and conditions of employment that the person provides, or would provide, to an Australian citizen or an Australian permanent resident to perform equivalent work in the person's workplace at the same location". The Minister has put into evidence the awards for the hospitality industry which applied from 1 January 2010. Those awards made provision, inter alia, for standard working hours per week (see eg cl 29.1 of the Hospitality (General) Award 2010 (2010 Award)), reasonable overtime (see eg cl 33 of the 2010 Award), and penalty rates (see eg cl 32.1 of the 2010 Award). In the particular circumstances, the Minister does not place reliance on those awards for the purpose of the submissions as to the appropriate amount of the pecuniary penalties to be imposed, or as to the terms of the restitution orders sought. 25 It is accepted that the payments made to the 457 Visa Holders were significantly less than those requirements. Upon commencing employment with Choong Enterprises each of the 457 Visa Holders was paid $12 or $13 per hour worked depending on the date their employment commenced. That amount was increased, over time (often annually but in some cases a lesser period), by $1 per hour. 26 The hours the 457 Visa Holders worked were sporadic. In the dry season (between April and September) they worked approximately 60 hours per week (well in excess of the standard 38 hour week and with no increased payment for overtime). In the wet season (between October and March) the Visa Holders worked shorter hours. There has been no full attempt to quantify the extent to which any of the 457 Visa Holders were underpaid when working during the wet season, presumably because the available records do not enable that to be done. 27 However, it is accepted that between 14 September 2009 and 15 March 2012, none of the 457 Visa Holders was paid more than $14 per hour. In addition, none was paid at different rates for working overtime or for working on public holidays (noting that, in the case of the six 457 Visa Holders who were nominated before 14 September 2009, they each worked for approximately 60 hours per week between April and September of each year), or received paid sick leave. There is no significant information, or any agreed fact (except in one instance) about the extent, if at all, any of the 457 Visa Holders were entitled to, but did not receive, paid sick leave. 28 In the case of Ms Culion and Ms Enriquez, whose nominations were approved after 14 September 2009, they had a guaranteed annual earnings requirement for the purpose of reg 2.79(3)(a), of $50,000 per annum (excluding superannuation). That salary equated to a rate of pay of approximately $25 per hour, the salary being based on a 38 hour week. Between 24 November 2011 and 11 March 2012, neither Ms Culion nor Ms Enriquez earned more than $13 per hour, for a 36-40 hour week.

Regulation 2.82 29 Between 14 September 2009 and on or about 15 March 2012, Choong Enterprises failed to keep any records that were capable of being verified by an independent person of the weekly wages paid to each of the 457 Visa Holders. Instead, each of the 457 Visa Holders was paid in cash, which the second respondent Mr Choong or others provided to them in an envelope. Apart from the annotation of the amount paid on the envelope, Mr Choong did not separately record the amounts that he paid.

Regulation 2.84 30 By contrast with other contraventions, Choong Enterprises' breach of reg 2.84 (the failure to notify the Minister when a sponsored employee ceases employment) relates to only one of the 457 Visa Holders (Mr Dumasig). Mr Dumasig was dismissed on 16 December 2011, but the Department of the Minister was notified only on 13 January 2012, rather than within the 10 day period specified.

Regulation 2.86 31 Choong Enterprises contravened reg 2.86 in relation to three 457 Visa Holders. As with the underpayment of breaches, the contraventions of this regulation, which concern three of the 457 Visa Holders, involved a significant departure from what was nominated to those Visa Holders when they were interviewed and entered into contracts: (a) in relation to Ms Enriquez and Ms Culion, the period of the contravention was some three and a half months, during which their duties comprised those of "Fast Food Cooks and Kitchenhands", rather than the "Café/Restaurant Manager" duties in respect of which they had been nominated and granted a visa; and (b) the period of the contravention in Mr Largado's case was much lengthier. Between 14 September 2009 and on or about 15 March 2012, he performed duties which were not included in the definition of "Cook" and which were not consistent with that occupation but, rather, were consistent with the definition of "Fast Food Cooks and Kitchenhands".

Regulation 2.87 32 The contraventions of reg 2.87 in recovering recruitment costs from the visa holder relate to four of the ten 457 Visa Holders. They occurred over a period from one and a half to two months: (a) between 14 September 2009 and on or about 1 November 2009, Choong Enterprises deducted approximately $1400 from Mr Dumasig's weekly pay, in amounts of $200 to $300 per week; (b) between on or about 15 September 2009 and on or about 15 November 2009, Choong Enterprises deducted approximately $1800 from Mr Largado's weekly pay, in amounts of $200 per week; (c) between on or about 14 September 2009 and on or about 16 November 2009, Choong Enterprises deducted approximately $1800 from Ms Sebastian's weekly pay, in amounts of $200 per week; and (d) between on or about 14 September 2009 and on or about 1 November 2009, Choong Enterprises deducted approximately $1400 from Mr Rodriguez's weekly pay, in amounts of $200 per week.

General 33 Subject to the matters discussed later in these reasons, each of those items of conduct constitute contraventions of s 140Q of the Act. Indeed, the respondents accept that the Court should make declaratory orders concerning each contravention, as sought in the Amended Originating Application of 13 February 2005. 34 There is no apparent reason why, in the light of the findings based upon the SAF and the affidavit of Vikash Solonki, such orders should not be made. 35 There are 10 declarations to be made concerning Choong Enterprises, separately in respect of each of the 457 Visa Holders, for failing to satisfy the sponsorship obligation in reg 2.79. There is a proposed declaration concerning Mr Choong, and separately one concerning the third respondent, Ms Choong, that each by operation of s 486ZD(2) of the Act (as then in force) also contravened s 140Q by aiding, abetting, counselling or procuring those contraventions by Choong Enterprises. It will be necessary to consider whether they should be made, especially in the case of Ms Choong. 36 There are two proposed declarations concerning the contravention by Choong Enterprises of s 140Q in respect of the sponsorship obligation under reg 2.82. One, of failing to keep records of the monies paid to each of the ten 457 Visa Holders, is straightforward and is clearly made out. The other proposed declaration, also in respect of reg 2.82, is that Choong Enterprises provided "false documents to the [Department] in purported compliance with the sponsorship obligation contained in reg 2.82". The SAF and the affidavit referred to supports findings of such a contravention. There is also a declaration sought of accessorial liability on the part of Mr Choong in relation to reg 2.82 which is acceded to and is straightforward. 37 The declaration sought, and including the complementary accessorial liability declaration sought against Mr Choong, for contravention of s 140Q for the failure to comply with the notification required by reg 2.84 is straightforward. 38 There are three declarations sought, separately for each of the three 457 visa holders referred to, concerning the failure to ensure that each worked in the occupation for which he or she was nominated to satisfy the sponsorship obligation in reg 2.86. A declaration of contravention by Mr Choong for accessorial liability by reason of those contraventions is also sought. Again, given the uncontested and admitted facts, those declarations are appropriate and it is a straightforward matter to decide to make them. 39 Finally, four declarations are sought, separately for each of the four 457 Visa Holders referred to, for recovering migration agent costs from each of them contrary to the sponsorship obligation in reg 2.87. And, a declaration of accessorial liability on the part of Mr Choong in respect of those contraventions is also sought. As in other instances, the uncontested and admitted facts provide a proper basis for making those declarations as sought.

Civil Penalties 40 Section 486R of the Act makes provision for the imposition and determination of pecuniary penalties. At the time of the contravening conduct in question, s 486R(2) provided that if the Court is satisfied that the wrongdoer has contravened a civil penalty provision, the Court may order the wrongdoer "to pay to the Commonwealth for each contravention the pecuniary penalty that the court determines is appropriate", subject to the cap specified in the relevant civil penalty provision. 41 Apart from consideration of the maximum available penalty, s 486R(3) requires the Court to consider: all relevant matters, including: (a) the nature and extent of the contravention; and (b) the nature and extent of any loss or damage suffered as a result of the contravention; and (c) the circumstances in which the contravention took place; and (d) whether the person has previously been found by a court in proceedings under this Act to have engaged in the same or similar conduct. 42 The Minister submitted that the terms of s 486R(2) indicate an intention on the part of the legislature to make the prescribed penalty available for each contravention of the relevant civil penalty provision. It is said that that intention is confirmed by extrinsic materials, in particular the Explanatory Memorandum to the Migration Legislation Amendment (Worker Protection) Act 2008 (Cth) (2008 Amending Act), pursuant to which the civil penalty regime was inserted, to which the Court's attention was drawn. 43 Section 486ZA of the Act also relevantly provides: (1) Proceedings against a person for any number of orders to pay pecuniary penalties for contraventions of a civil penalty provision that are founded on the same facts or form, or are part of, a series of contraventions of the same or a similar character, may be joined. (2) The Federal Court or the Federal Magistrates Court [now the Federal Circuit Court] may make a single order to pay a pecuniary penalty for all the contraventions described in subsection (1), but the penalty must not exceed the sum of the maximum penalties that could be ordered if a separate penalty were ordered for each of the contraventions. 44 The applicable principles are well established. 45 The quantification of a civil penalty is a discretionary judgment that must involve a weighing of all relevant factors rather than starting from a predetermined figure and making incremental additions or subtractions for each separate factor: Markarian v The Queen (2005) 228 CLR 357 at [39] (Markarian). 46 In Trade Practices Commission v CSR Ltd (1991) ATPR 41-076, which dealt with the imposition of a civil penalty under s 76 of the Trade Practices Act 1974 (Cth), French J (as his Honour then was) made the following observation at 52,152: The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act. 47 That observation has been applied in relation to other civil penalty regimes: see eg Minister for Environment v Lucky S Fishing Pty Ltd [2015] FCA 10 at [48] and the cases there cited; Australian Securities and Investments Commission v GE Capital Finance [2014] FCA 701 at [73]; Australian Communications and Media Authority v Radio 2UE Sydney Pty Ltd (No 2) (2009) 178 FCR 199 at [31]-[33]. 48 It is clear that the setting of an appropriate civil pecuniary penalty should have the function of serving both specific and general deterrence: see per French CJ, Crennan, Bell and Keane JJ in Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at [65], and per Gageler J at [84]. Their Honours referred with approval in this context to the statement of the Full Court of the Federal Court, in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249 (at [62]-[63], that the penalty for contravention of the Trade Practices Act 1974 (Cth): … must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business ... [T]hose engaged in trade and commerce must be deterred from the cynical calculation involved in weighing up the risk of penalty against the profits to be made from contravention. 49 In my view, the imposition of obligations on approved sponsors under the Act, and the enactment of a civil penalty regime to enforce observation of those obligations, has a twofold protective purpose: (1) to secure the integrity of the Australian labour market - by ensuring that persons who are sponsored to work in Australia are not employed in a manner that undercuts standard conditions of employment; and (2) to protect those persons who are brought to Australia and who are vulnerable to exploitation. 50 I accept the Minister's submissions to that effect. These purposes are confirmed by the extrinsic materials to the 2008 Amending Act, pursuant to which the civil penalty regime was enacted. The Explanatory Memorandum to the 2008 Amending Act described the legislation as "designed to preserve the integrity of the Australian labour market and ensure that the working conditions of sponsored visa holders meet Australian standards". The civil penalty provisions were intended to support the sponsorship framework as established, including the structure for better defined sponsorship obligations for employers. The power in s 486R(6) to order a contravener to make, in effect, restitutionary payments, one purpose of which is clearly to avoid persons affected by contraventions having to commence separate proceedings to recover sums that are owing to them, further supports that the provisions are directed at maintaining public confidence in the sponsorship system. 51 The maximum penalty available for a contravention of s 140Q is $6600 for an individual and $33,000 for a corporation. The High Court in Markarian at [31] by the plurality said: It follows that careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick. That having been said, in our opinion, it will rarely be, and was not appropriate for Hulme J here to look first to a maximum penalty, and to proceed by making a proportional deduction from it. That was to use a prescribed maximum erroneously, as neither a yardstick, nor as a basis for comparison of this case with the worst possible case. 52 Those statements have been held to apply to the imposition of civil penalties: see Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 (Australian Ophthalmic Supplies) at [108]; Minister for Sustainability, Environment, Water, Population and Communities v Woodley [2012] FCA 957 at [40]-[41]; Australian Communications and Media Authority v Bytecard Pty Ltd [2013] FCA 38 at [38]-[39]; and Secretary, Department of Health and Ageing v Export Corp (Australia) Pty Ltd (2012) 288 ALR 702 at [49]-[50] and [67]. 53 It is also well settled that, where the same, or very similar, conduct may give rise to a number of technically distinct offences, the law "recognises that an offender ... should be given a sentence which fairly reflects the substance of the offending conduct, rather than a purely mathematical accumulation of sentences for each separate offence which may be able to be technically identified": Clean Energy Regulator v MT Solar Pty Ltd [2013] FCA 205 at [75] (Clean Energy Regulator). Where multiple offences truly represent only one multi-faceted course of conduct, the course of conduct principle is a "tool of analysis" which can be used to avoid any double punishment for those parts of the legally distinct offences which involve overlap in wrongdoing: Clean Energy Regulator at [75], citing Pearce v The Queen (1998) 194 CLR 610 at [40]-[42]; Johnson v The Queen (2004) 205 ALR 346 at [4]-[5] and [27]; Attorney-General (SA) v Tichy (1982) 30 SASR 84 at 92-93. In the civil penalty context, see Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [41]-[46], and Construction, Forestry, Mining and Energy Union v Cahill (2010) 194 IR 461 at [38]-[42]. 54 The question which arises in each case is whether the contravention should be treated as being truly a single course of conduct or whether the contravention's separate character should be maintained when penalties are imposed. This is a factual enquiry to be made having regard to all of the circumstances of the case. 55 On the other hand, while s 486ZA(2) permits the Court to make a single order to pay a pecuniary penalty, a conclusion as to the appropriate amount can only be reached after consideration of the appropriate penalty for each contravention and bringing to account principles of totality. Justice Gilmour summarised the applicable principles in Fair Work Ombudsman v Offshore Marine Services Pty Ltd (2012) 219 IR 435 at [7]-[8]: If, as in this case, two or more contraventions have common elements, this should be taken into account in considering what is an appropriate penalty in all the circumstances for each contravention. OMS should not be penalised more than once for the same conduct. The penalties imposed by the Court should be an appropriate response to what OMS did: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [71]. This task is distinct from, and in addition to, the final application of the "totality principle": Mornington Inn Pty Ltd v Jordan; (2008) 168 FCR 383; 171 IR 455 at [41]-[46] per Stone and Buchanan JJ. Once an appropriate penalty has been arrived at for each set of contraventions, that aggregate sum should then be examined to determine whether it is an appropriate response to the conduct which led to the breaches: Kelly v Fitzpatrick (2007) 166 IR 14 at [30]; Australian Ophthalmic Supplies at [23] per Gray J; at [71] per Graham J; and [102] per Buchanan J. The Court should apply an "instinctive synthesis" in making this assessment: Australian Ophthalmic Supplies at [27] per Gray J and [55] and [78] per Graham J. This is an application of the totality principle. 56 As Keane CJ and Marshall J observed in QR Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (2010) 204 IR 142 at [62], aggregation of the penalties for each contravention or group of contraventions is necessary in order to consider whether it is "so out of proportion to the overall misconduct of the appellants as to constitute an unjust result". 57 I note that there is no equivalent in the Act to s 557 of the Fair Work Act 2009 (Cth) (and previously s 719(2) of the Workplace Relations Act 1996 (Cth)) which prescribes that for the purposes of that Act, two or more contraventions of a civil remedy provision (of specified character) are generally to be taken to be a single contravention if the contraventions are committed by the same person, and if they arose out of the same course of conduct. However, s 486ZA(2) of the Act, in empowering the Court to make a single order for multiple contraventions of a civil penalty provision that are founded on the same facts, or form, or are part of, a series of contraventions of the same or a similar character, would appear by the power to make a single order to accommodate the totality principle. 58 In Markarian, the plurality described the process of fixing the appropriate penalty or penalties at [37] as one of "instinctive synthesis". In Australian Opthalmic Supplies, Buchanan J said at [102]: The totality principle is a guide to sentencing practice. It must be adapted to the circumstances. It is designed to avoid injustice in the overall result. It is not a principle which suggests that a penalty should necessarily be reduced from an aggregate total fixed for multiple offences. Rather, it involves a final check to ensure that a total or aggregate penalty is not, in all the circumstances, excessive.

General observations 59 The contraventions of s 140Q by failing to comply with the obligations imposed by reg 2.79(2) and (3) are significant. They involved a significant departure from the minimum conditions to which the 457 Visa Holders would have been entitled if they were Australian citizens. In the case of the two 457 Visa Holders who were nominated after 14 September 2009, the manner in which they were paid involved a marked departure from the guaranteed annual earnings requirement in their respective employment contracts. 60 Moreover, in underpaying the 457 Visa Holders, Choong Enterprises denied those Visa Holders the benefits of employment that are provided to Australian workers as a matter of course, such as public holiday loadings and paid sick leave, Choong Enterprises obtained a significant financial benefit to the direct detriment of the 457 Visa Holders. 61 It is accepted that Mr Choong is the sole director and shareholder of Choong Enterprises, so he also indirectly derived a significant financial benefit from those contraventions. 62 It is also significant in this context that on three occasions on about 9 November 2009, 8 February 2011 and 30 November 2011, Mr Choong, who, on behalf of Choong Enterprises, prepared the weekly wages for each of the 457 Visa Holders and determined their rates of pay, was expressly informed by officers of the Department, of the nature of Choong Enterprises' obligations under reg 2.79. The fact that Choong Enterprises did not take heed of these reminders and continued, apparently undeterred, to engage in the contravening conduct, to the detriment of the 457 Visa Holders, warrants a significant pecuniary penalty on Choong Enterprises. The element of general deterrence is significant, the more so where it appears that the contraventions were known to contravene the sponsorship obligations. 63 The Minister's contention concerning Ms Choong is that she was at all times involved in the business activities of Choong Enterprises and was "able to influence" its compliance with the sponsorship obligations. I do not make that finding in a way that influences the decision whether to make any declaratory order against her, or to impose any pecuniary penalty on her. She is neither a director nor shareholder of Choong Enterprises. She is not said to have been an officer of that company. The direct evidence of her role is limited to her providing to Ms Gaitan, Ms Culion and Ms Enriquez on about 5 March 2012 written payslips dated 27 February 2012 and 5 March 2012 which, to her knowledge, were inaccurate: see SAF [85]. Consequently, I do not consider the general acknowledgment in SAF [5] to be sufficient to act upon in the way the Minister urges. 64 I am prepared to make a declaration of contravention as an accessory for that specific conduct, but not in the broad terms requested. I am also prepared to impose a pecuniary penalty on her for her accessorial role on that occasion, reflecting her admitted awareness that what she was doing at that time did not accurately reflect the actual payments. But I do not do so on the basis that she was aware, more broadly, of the failure by Choong Enterprises to fulfil its sponsorship obligations under reg 2.79 and was not doing so in a considered and consistent way. 65 The contravention of the sponsorship obligations under reg 2.82 was also egregious. As was the case in relation to Choong Enterprises' failure to comply with reg 2.79, it was reminded on the same three separate occasions referred to, through Mr Choong, of its record-keeping obligations, in the course of visits from Departmental officers on about 9 November 2009, 8 February 2011 and 30 November 2011. 66 The requirement to keep records serves an important monitoring function. It is also a significant element of the enforcement regime. The absence of proper records significantly impedes any investigation of the extent to which the 457 Visa Holders' terms and conditions of employment were less favourable than the terms and conditions of employment that Choong Enterprises would have to have provided to an Australian citizen. The failure to keep records would also have impacted on the capacity of the Australian Tax Office (ATO) to ascertain the appropriate tax. It is also clear in this instance that the failure has made it more difficult to establish the extent to which the 457 Visa Holders have been underpaid. 67 It is also significant, in this context that Choong Enterprises not only failed to keep any records, to the detriment of its workers and the proper functioning of the sponsorship system, but also on at least two occasions, through Mr Choong, it provided documents to the Department of the Minister that purported to be records of weekly wages paid to each of the 457 Visa Holders but which did not reflect their hours of work or what they were paid. Those inaccurate records were provided on about 11 February 2011 relating to the period July 2009 to December 2010, and then again on about 16 January 2012. 68 In the overall picture of the contravening conduct, the circumstances referred to in relation to the failure to meet the record keeping obligations is, in my view, a serious one. Like the contraventions concerning reg 2.79, it is compounded by the fact that the conduct continued despite and after the three warning visits. And, in this instance, it is compounded by the presentation of inaccurate records to the Departmental officers. 69 In the absence of any explanation from Mr Choong, I would have thought it plain enough that the presentation of inaccurate records by Choong Enterprises through Mr Choong was not simply an attempt to cover up past wrongful conduct, but to enable the continued contravention of the sponsorship obligations under regs 2.79 and 2.82 undetected. However, Mr Choong in his submissions made the point that the false records of wages paid were created at the request of particular 457 Visa Holders who wanted evidence to support their tenancy applications. That is somewhat vague, but in the circumstances where he appeared for all respondents I am prepared to accept that explanation for the creation of inaccurate pay records. It is a little double edged. The proposition he put involved inflating the actual pay records to enable the particular 457 Visa Holders to present an inaccurate and inflated level of wages; it also involved a clear awareness that the actual wages were lower than they should have been. That tends to be confirmed by the presentation to the Department also of the inflated wage records, knowing they were false. So, whilst I proceed on the basis that the inaccurate wage records were not created to mislead the Department, they were produced knowing they were inaccurate and would or were intended to mislead the Department, and that that conduct occurred on two occasions. 70 There is little to be observed about the failure on one occasion, and for a fairly brief period, to comply with reg 2.84. The notification was given, albeit about 10 days late (allowing for the Christmas period). There is nothing to suggest that it was prompted, so I treat the non-compliance as a minor one. It will attract a nominal penalty. I see no reason why the deterrent elements discussed, in the circumstances, call for a significant pecuniary penalty. 71 In relation to the failure to comply with the sponsorship obligations under reg 2.86, the Minister submits they constitute a "significant subversion" of the Sponsorship Visa program, because they involved Choong Enterprises misleading the Department as to what tasks these 457 Visa Holders would be performing in Australia, as they were employed in different positions for which no 457 visa could have been obtained, and in respect of which Choong Enterprises would have to have paid Australian workers more money and complied with all of the applicable award conditions. The monetary benefit that Choong Enterprises gained from this conduct was at the expense of the integrity of the Australian labour market and to the direct exploitation of the three 457 Visa Holders, who left their own country on the basis of an understanding (confirmed by Ministerial approval of their nominated occupation) as to what they would be doing upon their arrival. 72 I accept, as it is agreed, that the occupations of "Cook" and "Café/Restaurant Manager" were approved occupations under reg 1.20H of the Regulations, and s 140GB of the Act, respectively. I also accept, as it is agreed, that the occupation of "Fast Food Cooks and Kitchenhands" was not an approved occupation. 73 I also accept that there is a difference in pay rates and responsibilities under the relevant award between the three classifications. 74 Mr Choong in his submission did not positively say that he did not know the difference, but that was implicit in what he said. It is not agreed that Choong Enterprises sponsored the visa of the three named 457 Visa Holders, aware that their proposed duties did not fit the approved classifications. Nor is it agreed that, when they were employed, their duties did not fit the approved classifications. Mr Choong suggested that, in each case, the duties involved considerable skill (as he described it) in food preparation, portioning, cooking and presentation, and customer relations, albeit that the business operates as "fish and chip shops". 75 In respect of these contraventions, I proceed on the basis that the misstatement of the classifications is not shown to have been a deliberate one, and that any underpayment by the classifications given to the work by Choong Enterprises compared to that for the approved classifications (as distinct from underpayment compared to the award rates which were required by the given classifications: reg 2.79 contraventions) was also not intended. 76 Consequently, I think the appropriate pecuniary penalties are well towards the lower end of the range. 77 The recovery of recruitment costs from visa holders contrary to the sponsorship obligations under reg 2.87 is also an egregious one. 78 At the time, each of the affected 457 Visa Holders was earning $12 per hour. In circumstances where the Visa Holders were being underpaid, the recovery of migration agent fees on top of that underpayment increases the seriousness of the breaches. As the person who was responsible for preparing the wages, Mr Choong was squarely involved in aiding these contraventions of reg 2.87. Express instruction and information to the contrary was given to Mr Choong by an officer of the Department on about 9 November 2009. It appears that shortly after this instruction Mr Choong then ceased that practice. He does not say he repaid the recovered sums from the four persons affected. I proceed on the basis that he did not realise, before 9 November 2009, of the import of reg 2.87 although of course that is not to say that he should not have done so.

ORDERS 79 In addition to the declaratory orders sought, the Minister seeks pecuniary penalties in respect of each of the contraventions. 80 Additionally, the Minister seeks restitution orders under s 486S(4) of the Act in favour of the disadvantaged 457 Visa Holders to be made by Choong Enterprises. Those amounts reflect the Minister's calculations recorded in the written submissions of underpaid wages having regard to reg 2.79 to seven of those persons (the remaining three, it is said, having not been able to be contacted or having left Australia) and in addition the recovery, in the case of four of the 457 Visa Holders, of the money wrongly recovered from them under reg 2. 81 As to the restitution orders, Mr Choong made no submissions either challenging the correctness of the Minister's calculations, or disputing that it would be an appropriate exercise of the power under s 486S(4) to make such orders. 82 In the course of submissions, I raised the question of whether those orders should be based upon the gross or not underpaid earnings. The Minister has pointed out that the hourly rates paid by Choong Enterprises to the 457 Visa Holders were exclusive of any tax (as the SAF accepts), and it is simply not explored whether Choong Enterprises withheld any tax payable above those hourly rates and accounted for it to the ATO. 83 In my view, it is necessary to re-adjust the calculations of underpaid wages, to base them on the gross hourly rates of pay applicable (on the assumption that Choong Enterprises was obliged to deduct income tax payable on the wages of its employees) and to account for the tax withheld to the ATO. The recalculated sum will be payable to the 457 Visa Holders, less the tax payable on it. Choong Enterprises will have to account to the ATO for that tax then withheld. If that results in a 457 Visa Holder recovering less than that person would otherwise have been entitled to receive, because of that person's personal circumstances or available deductions, that person can seek an appropriate adjustment through the ATO. 84 I am not in a position to reliably calculate the appropriate amounts, even proceeding (as I understand the Minister did) on the basis that it is too difficult to make allowance for rates above the hourly rate based on a 38 hour week. That is because, in endeavouring to do so, I found difficulty in reconciling the calculations of underpayment made by the Minister in the written submissions with the net hourly rates (or the gross hourly rates) agreed in the SAF. For instance, the calculation made with respect to Mr Dumasig calculates the difference between his actual payments and a net hourly rate payable of between $14.31 and $16.57 per hour, but the SAF is that the net hourly rates applicable to him are between $17.34 and $17.53. There may be a straightforward explanation for the differences. 85 Rather than speculate, I will not make final orders with respect to the appropriate gross payments to which he was entitled for the periods of underpayment. The amounts actually received (net) are agreed and calculated. The difference represents what each should have been paid, subject to income tax properly withheld and either accounted to, or to be accounted to, the ATO. If he has declared his income, on some other basis, the correct amounts payable to him can then be adjusted in each case between that person as the taxpayer and the ATO. 86 Accordingly, the appropriate order should be that Choong Enterprises pay a specified sum (gross wages entitlement, less tax properly withheld as the employer) to be accounted to the ATO, less the tax actually withheld and accounted to the ATO, less the actual net payment as calculated. That order will then specify the gross entitlement, and the actual net payment, and it will be up to Choong Enterprises to make the appropriate tax calculations and account to the ATO for the amount withheld. As I have indicated the particular 457 Visa Holder, if that person paid tax on the income, can secure the appropriate refund from the ATO for any double counting. 87 In the case of the payments to reimburse four of the 457 Visa Holders for deductions wrongly made from their wages by reason of reg 2.87, those amounts are clearly not taxable income and should be paid in full to the three persons concerned. I will make orders accordingly. 88 It is, of course, in fixing the appropriate pecuniary penalties, necessary to have regard to other factors which might mitigate against imposing penalties which might otherwise be appropriate. 89 I take into account that none of the respondents has previously been found by a court in proceedings under the Act, or (it is accepted) in other proceedings, to have engaged in the same or similar conduct: see s 486R(3)(d). I have discussed earlier in these reasons the matters referred to in s 486R(3)(a)-(c). 90 I also take into account that Choong Enterprises is no longer a sponsor under the Act, as its sponsorship approval was cancelled under s 140M(1)(a) on 17 July 2012. The element of the need for specific, as distinct from general, deterrence is in the circumstances relatively slight. 91 I also take into account that each of the respondents have cooperated with the Minister in the preparation of the SAF. The Minister accepts that the respondents accepted at an early point most of the contravening activity alleged in the original Application and Statement of Claim. That has had the benefit of reducing the resources required for the prosecution of the proceeding both by the Minister and in using the Court's resources. 92 I also take from the SAF that the conduct reflected in that cooperation indicates that the respondents are resolved not to engage in similar contravening conduct in the future. In the brief submissions made by Mr Choong, he also accepted that the record keeping of Choong Enterprises at the material times was quite inadequate, and that it has now put in place a more sophisticated and reliable system. 93 Each of those matters, although briefly stated, is of real significance in the decision as to the appropriate pecuniary penalties. 94 One other matter should be mentioned. There is no suggestion that there will be particular hardship to any of the respondents by the orders which are to be made, the potential of which is signalled by the minister's written submission. It was pointed out to Mr Choong that, if there were any real point to be made on that topic, it would have been necessary to present material to support it. He did not seek the opportunity to do so, although he reserved the entitlement when the first orders are made to make an application about the staging of, and the timing of, the payments then ordered to be made. 95 The appropriate pecuniary penalties in respect of the breaches of the sponsorship obligations should be set, as the Minister submitted, having regard to the period of contravention, and to the occasions when Choong Enterprises was warned of the need to comply with the applicable entitlement. 96 I do not adopt the submission that it is preferable to break up the penalty applicable to each contravention into the four periods (or up to four periods, depending on the individual circumstances) by the dates of the warnings. Nor do I accept that there are, or that the conduct should be treated as, separate contraventions in respect of each of those four periods. If that were correct, for example in the case of Mr Largado whose employment extended between September 2009 and March 2012, there would be four contraventions each with a maximum penalty of $33,000 making a total of $132,000, for the failure to observe the sponsorship obligation under reg 2.79. I propose to treat the contraventions of each of the several sponsorship obligations separately, and at least in the first place - that is, subject to the discretion in s 486ZA(2) - to consider an appropriate penalty for the contravention concerning each of the 457 Visa Holders as applicable.

Regulation 2.79 97 In the light of that approach, there are 10 contraventions (in the sequence listed at [6] above) as set out in the following table: Name Period Ms Gaitan 14 September 2009 - 1 March 2012 Ms Tangey 14 September 2009 - 24 October 2010 Mr Dumasig 14 September 2009 - 16 December 2011 Ms Sebastian 14 September 2009 - 15 March 2011 Mr Rodriguez 14 September 2009 - 11 March 2012 Mr Largado 14 September 2009 - 2 March 2012 Mr Aguilar 3 March 2012 - 11 March 2012 Ms Culion 24 November 2011 - 11 March 2012 Mr De Leon 26 November 2011 - 11 March 2012 Ms Enriquez 26 November 2011 - 4 March 2012 This list of periods is taken from [58]-[74] of the SAF, and is somewhat different from the dates on the Minister's written submissions. 98 In each case, although the applicable award rate varied from time to time, and with the job description, the broad picture is of underpayment of an after tax entitlement of between $2 and $5 per hour for each working week (with some significant variations), plus there being no allowance for overtime (during the loner hours of the "dry season" or for any sick leave (although on the available material only one of the 457 Visa Holders was unfit for work by reason of illness during the period) or for superannuation. As the proposed restitution orders indicate, the underpaid amounts are said to total net about $9200-11,000 for each employee who worked for a period of in excess of two years. That gives some indication of the nature and extent of the respective contraventions, and of the loss and damage suffered by the 457 Visa Holders as a result. The figures mentioned may be understated having regard to my observations at [83]-[86], but the difference will not materially affect my assessment of the pecuniary penalties. 99 Having regard to the relevant considerations, I would be disposed to order a pecuniary penalty on each of the contraventions concerning Ms Gaitan, Mr Dumasig, Ms Sebastian, Mr Rodriguez and Mr Largado of $20,000. As noted above, those figures reflect and represent the "instinctive synthesis" referred to in Markarian. 100 In the contraventions concerning Ms Tangey, Mr Aguilar and Mr De Leon, where the periods of employment are shorter, I would impose a pecuniary penalty of $16,000 for the contravention in respect of Ms Tangey and $12,000 for each contravention in respect of Mr Aguilar and Mr De Leon. 101 In the cases of Ms Culion and Ms Enriquez, where the period of employment is much shorter but the period is after the third warning, I would impose a pecuniary penalty of $16,000. 102 On that basis, the total penalties for these 10 contraventions would be $172,000. I will review that total figure later in these reasons, as I propose to exercise the power under s 486ZA(2) to fix one penalty for the 10 contraventions of s 140Q in relation to the failure to comply with the sponsorship obligations under reg 2.79. 103 Clearly, Mr Choong was complicit in these (and all the) contraventions. He was the principal person involved. He was the person deciding on the payment regime, and the person who received and did not take heed of the warnings. 104 The Minister has sought pecuniary penalties be imposed on Mr Choong, in round figures representing the something less, as a proportion of the applicable maximum for an accessory, than the suggested pecuniary penalties for Choong Enterprises. 105 However, it is accepted that Mr Choong is the sole shareholder and director of Choong Enterprises. Consequently, the pecuniary penalties imposed on Choong Enterprises will involve a loss that will ultimately be borne by Mr Choong. In Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169, that circumstance led to Finkelstein J imposing a considerably lesser accessorial penalty on the director than would otherwise have been the case: see at [45] and [50]. In Australian Competition and Consumer Commission v Visy Industries Holdings Pty Ltd (No 3) (2007) 244 ALR 673, Heerey J took the same factor into account at [294], noting that there were other decisions also that recognise that in such circumstances it is legitimate to avoid double counting where an individual contravener is an owner of a corporate contravener. In that case, no pecuniary penalty was imposed on that individual. See also the remarks of Weinberg J in Australian Competition and Consumer Commission v Commercial and General Publications Pty Ltd (No 2) [2002] FCA 1349 at [27]-[29] to the same effect. 106 For the same reasons, I do not propose to impose additional pecuniary penalties on Mr Choong for the contraventions to which he was an accessory. As Weinberg J considered, in my view that will not diminish the deterrent effect of the orders to be made. I note that there is no suggestion that Choong Enterprises will not be able to meet the substantial pecuniary penalties imposed on it. 107 In that context, I note also that the costs order will make both Choong Enterprises and Mr Choong liable for the costs of this proceeding. As that is a joint liability, there is no element of double counting. 108 In relation to Ms Choong, having regard to the relevant factors, in my view her accessorial conduct should attract a pecuniary penalty of $800.

Regulation 2.82 109 The failure to keep any, or any reliable, records of the wages paid to the 457 Visa Holders over a period of some two and a half years, and despite having been warned of the need to do so, is a significant one. The reasons for that are referred to above. There is no justification offered. The factors which might mitigate the appropriate pecuniary penalty are also addressed above. 110 In my view, on all the relevant matters, it is appropriate to impose a pecuniary penalty towards the upper end of the scale. That is the more so because the conduct was so consciously wrong, as evidenced by the production of incorrect records on certain occasions. Whilst I do not accept that it is appropriate to regard the contraventions as being 10 contraventions, because the records were required to be kept for each of the 457 Visa Holders, or as being from contraventions because the periods up to and after each warning should be separated, in my view, the appropriate pecuniary penalty is $30,000. 111 Given the separate character of this contravention, I consider that penalty should stand and I do not propose to alter it under s 486ZA(2). I have also fixed it having regard to the "totality principle" and my stepping back to consider the overall effect of the orders to be made.

Regulation 2.84 112 I do not regard this contravention as serious. It is an isolated failure to give notice as required, but notice was given a little belatedly. I will impose a pecuniary penalty of $400. 113 I do not consider it appropriate to impose a penalty on Mr Choong separately for this contravention, although clearly (as the declaratory order records) he was an accessory to the contravention.

Regulation 2.86 114 In my view, each of the recovery actions against three of the 457 Visa Holders is a separate contravention. 115 I have referred above to the factors relevant to assessing the appropriate pecuniary penalty for each. In the case of Ms Enriquez and Ms Culion, the contravention was for a few months only and in the case of Mr Largado it covered about two and a half years. I accept that, at least in the case of Mr Largado, the line between "Cook" and "Fast Food Cooks and Kitchenhands" may not have been fully appreciated by Mr Choong. 116 In my view, the appropriate pecuniary penalty for each contravention is $13,000. The total of $39,000 will, subject to the review of penalties overall which I address below, be fixed as one penalty for the three contraventions under s 486ZA(2).

Regulation 2.87 117 The conduct of Choong Enterprises in seeking to recover the migration agent's fees from four of the 457 Visa Holders is also worthy of significant pecuniary penalties. Again, I consider that each contravention should be treated separately. The conduct ceased in November 2009, about when Mr Choong was told that it was in contravention of reg 2.87, but no reimbursement was made at that time. I also take into account the amounts involved. 118 In my view, having regard to the relevant factors, I would impose a pecuniary penalty of $4000 for each contravention. 119 Again, subject to reviewing overall the appropriateness of the pecuniary penalties I have assessed, I would make one order for the payment in relation to these contraventions.

Conclusions as to penalty orders 120 It is necessary to set back and review the overall pecuniary penalties owed to ensure that, in all the circumstances, they are appropriate. 121 For the reasons expressed above, I regard the contravention of reg 2.82 as a discreet contravention, of considerable significance, where the element of general deterrence is a major factor. I will maintain the proposed orders as set out above. 122 The contravention of reg 2.84 is, in the overall review of the contravening conduct, a relatively minor matter of delay in compliance, but nonetheless unprompted compliance. The proposed order is an appropriate one. 123 The contraventions of reg 2.79, reg 2.86 and reg 2.87 have some degree of commonality, as they concern the amounts paid to the 457 Visa Holders, although each concerns conduct of a separate character. Each, however, then concerns, within its own chapeau, conduct of a similar character over a more or less common period of time, but engaged in towards different employees. And, of course, as the Minister has pointed out, each of those three sets of contraventions is important to the proper administration and enforcement of the general sponsorship scheme under the Act as well as its importance to protecting the individual employees. Nonetheless, having regard to those matters and to the amounts the subject of the restitution order, I think the total arrived at is outside the appropriate range. 124 As foreshadowed, I propose to make an order imposing one pecuniary penalty for the 10 contraventions of s 140Q for failing to comply with reg 2.79, and I propose to reduce the total arrived at by the several steps discussed above to $120,000 in the case of Choong Enterprises. 125 For the contraventions for failing to comply with reg 2.86, there will be one pecuniary penalty imposed on Choong Enterprises of $15,000. There is clearly no science about the selection of these figures as the appropriate ones, but they reflect an adjustment because of my overall assessment of the appropriate total penalties for all the contraventions. 126 Finally, for the contraventions for failing to comply with reg 2.87, there will be one pecuniary penalty of $10,000 imposed on Choong Enterprises. Those figures, too, reflect the same overall assessment. 127 The total of the pecuniary penalties imposed on Choong Enterprises is therefore $175,400. In my view, that represents a proper balance, having regard to the nature and extent of the contraventions and the need for the penalties to be fixed at a figure which will operate as a general deterrent to those who might otherwise be inclined to misuse the sponsorship regime under the Act, but on the other hand having regard to the particular factors which would militate against a very significant penalty in the case of the respondents. 128 The pecuniary penalties are to be paid to the Commonwealth.

Restitution 129 This aspect is not contentious, save for the matters addressed. For the reasons given, I will direct the Minister, by his representatives, having had an opportunity to confer with Mr Choong and to consider my reasons, to file and serve within a period to be specified a supplementary submission with respect to the quantification of, and payment of, the underpaid wages. I note that the Minister has confined the application for restitutionary payments under s 486R(b) to that which can be properly quantified and to those 457 Visa Holders whose whereabouts are known. These reasons require that the intentions in Minister's written submissions be revisited firstly to reconcile apparently different hourly rates. 130 In any event, Choong Enterprises should be ordered to pay the restitution for amounts wrongly deducted from wages in the face of reg 2.87. The 457 Visa Holders who were the subject of Choong Enterprises' breaches of reg 2.87 should at least have the money that was deducted from their pay returned to them. That would mean that: (a) Mr Dumasig should be granted restitution in the order of $1400. (b) Mr Largado should be granted restitution in the order of $1800. (c) Ms Sebastian should be granted restitution in the order of $1800. (d) Mr Rodriguez should be granted restitution in the order of $1400. 131 Both Choong Enterprises and Mr Choong are to be jointly liable to the Minister for the costs of this proceeding. I certify that the preceding one hundred and thirty-one (131) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.

Migration Legislation Amendment (Worker Protection) Act 2008(Cth)

Trade Practices Act 1974(Cth)

Workplace Relations Act 1996(Cth)

Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 Construction, Forestry, Mining and Energy Union v Cahill (2010) 194 IR 461 Fair Work Ombudsman v Offshore Marine Services Pty Ltd (2012) 219 IR 435 QR Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (2010) 204 IR 142 Australian Opthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169 Australian Competition and Consumer Commission v Visy Industries Holdings Pty Ltd (No 3) (2007) 244 ALR 673 Australian Competition and Consumer Commission v Commercial and General Publications Pty Ltd (No 2) [2002] FCA 1349

(2012) 194 LGERA 290

At a glance

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Judgment (18 paragraphs)

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Legislation Cited (7)

Cases Cited (23)

Cited By (2)