MAROULIS v DUFFIN - [2005] SASC 327

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Criminal)
MAROULIS v DUFFIN
Judgment of The Honourable Justice White
26 August 2005
MAGISTRATES - APPEALS FROM AND CONTROL OVER MAGISTRATES - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT - POWERS AND PRACTICE OF COURT ON HEARING
WORKERS' COMPENSATION - PROCEEDINGS TO OBTAIN COMPENSATION - DETERMINATION OF CLAIMS - APPEALS, JUDICIAL REVIEW AND STATED CASES - QUESTION OF LAW
Appellant found guilty by a Magistrate of offence of refusing, without lawful excuse, to comply with a requirement of an authorised officer - Notice issued pursuant to s 110 of the Workers Rehabilitation and Compensation Act 1986 ("WRCA") required appellant to produce records relating to patients who had claimed workers compensation - whether contravention of s 110(9)(b) of the WRCA - whether notice served a purpose to which s 110(1) referred - consideration of the purpose for which the notice was served on the appellant.
Held: s 110(1) of WRCA authorises an officer to exercise powers for the purposes of that Act and not for the purposes of any other Act - s 110 powers may be exercised to facilitate the exercise of powers conferred and duties imposed by particular provisions of the WRCA - no particular provision in the WRCA vesting either a power or a duty to which the requirement of the authorised officer was reasonably related - notice served on appellant did not contain a requirement under s 110 - appeal allowed and decison of Magistrate set aside - appellant acquitted of charge.
Workers Rehabilitation and Compensation Act 1986 (SA), s 2, s 32, s 53, s 64, s 110, s 120; WorkCover Corporation Act 1994 (SA), s 4, s 12, s 13, s 14; Occupational Health Safety and Welfare Act 1986 (SA), referred to.
WorkCover Corporation v BHP; Jagermann v WorkCover Corporation (1999) 73 SASR 393, applied.

MAROULIS v DUFFIN
[2005] SASC 327
Magistrates Appeal

WHITE J: The appellant is a registered psychologist. He has treated persons who have suffered work injuries. Those persons have claimed compensation, pursuant to s 32 of the Workers Rehabilitation and Compensation Act 1986 (“WRCA”), in respect of the cost of his treatment.
The WorkCover Corporation (“the Corporation”) is responsible for the administration of the WRCA. [1] The Corporation wished to investigate aspects of the appellant’s treatment and charges. Purporting to act pursuant to s 110(1) of the WRCA, an authorised officer of the Corporation required the appellant to produce specified records to him. The appellant refused to comply.
[1] Workcover Corporation Act 1994, s 13(1)(a)(ii).
On 22 June 2005, the appellant was found guilty by a Magistrate of the offence of refusing, without lawful excuse, to comply with a requirement of an authorised officer, contrary to s 110(9)(b) of the WRCA. This is an appeal against that finding.
The Statutory Provisions
Relevantly to the issues of this appeal, s 110 provides:
(1)     For the purposes of this Act, an authorised officer may, at any reasonable time—
(a)     enter any workplace;
(b)     inspect the workplace, anything at the workplace and work there in progress;
(c)     require a person who has custody or control of books, documents or records relevant to any matter arising under this Act to produce those books, documents or records;
(d)     examine, copy and take extracts from any such books, documents or records, or require an employer to provide a copy of any such books, documents or records;
(e)     take photographs, films or video or audio recordings;
(f)    take measurements, make notes and records and carry out tests;
(g)     require (directly or through an interpreter) any person to answer, to the best of that person's knowledge, information and belief, any question relevant to any matter arising under this Act;
(h)     require an employer to produce any document, or a copy of any document, that is required to be prepared or kept under this Act.
…
(3)     A person is not required—
(a)     to provide information under this section that is privileged on the ground of legal professional privilege; or
(b)     to answer a question under this section if the answer would tend to incriminate that person of an offence.
…
(9)     A person must not—
(a)     hinder or obstruct an authorised officer in the exercise of a power conferred by this section; or
(b)     refuse or fail, without lawful excuse, to comply with a requirement under this section.
Penalty: $10 000.
The Requirement Under s 110
At times relevant to these proceedings, a Mr Gregory Cannons was a person authorised by the Corporation to exercise powers under the WRCA. On 23 June 2004, Mr Cannons served on the appellant a written notice in the following terms:
TAKE NOTICE that pursuant to section 110 of the Workers Rehabilitation and Compensation Act 1986 (‘the Act’), I Gregory Ivan Cannons, c/- Cannons Investigations PO Box 194 Port Noarlunga SA 5167, an authorised officer for the purposes of the Act, hereby require you to
(a)     produce to me, and
(b)     permit the examination, copying and taking of extracts by me of
the following books, documents and records, namely books in your custody or control relating to your practise as a psychologist in respect of the period 1 January 2002 to 31 March 2004, being;
1.     all client appointment books and records
2.all records containing information as to dates of consultations, times of consultations, length of consultations and subject matter of consultations of the following clients, where such consultations were for the assessment or treatment of an injury or condition that was or may have been the subject of a claim for workers compensation by the client, such clients being [there then appeared 19 names] together referred to as ‘the WorkCover clients’.
3.All records of charges made for consultations with the WorkCover clients in relation to workers compensation matters.
The above books and records are required for the purpose of WorkCover Corporation conducting reviews:
1.of charges made by you comprising fees as a psychologist during the period referred to above in relation to the WorkCover clients.
2.of claims by the WorkCover clients for compensation for injuries including reviews as to the extent and costs of treatment.
These requirements are made pursuant to section 110 of the Act, and in particular section 110(1)(c) and (d) of the Act. Please note that section 110(3) of the Act provides that you are not required to provide any information that is privileged on the ground of legal professional privilege.
Section 110(9) of the Act provides that a person must not refuse or fail, without lawful excuse, to comply with a requirement made under section 110. Penalty $10,000.
The Notice then specified a date, time and place at which the production of the records was required.
It can be seen that, on its face, the Notice sought to invoke the powers contained in s 110(1)(c) and 110(1)(d) in relation to the records held by the appellant in respect of 19 clients, each of whom had submitted claims for compensation under the WRCA.
At the trial, it was an agreed fact that each of the 19 clients had, during the period 1 January 2002 to 31 March 2004, consulted the appellant in his professional capacity, that each had submitted claims to the Corporation seeking payment of the charges of the appellant for his treatment of them and that the appellant did, at relevant times, have custody and control of at least some of the documents described in each of the three categories specified in the Notice.
At the trial, the respondent led evidence from one witness only, a Ms Karger. At relevant times, she was employed by the Corporation as an Intelligence Analyst within its Compliance and Investigation Division. Her evidence was received de bene esse because of an objection by the appellant to its relevance and admissibility, but later the Magistrate ruled that it should be admitted. The appellant did not give evidence.
The Magistrate found that the Notice served on 23 June 2004 complied with the requirements of s 110 and was “lawful in all respects”.
Submissions on the Appeal
The appellant contended that the Magistrate should not have been satisfied that the requirements contained in the Notice were “for the purposes of this Act” as required by the opening words of s 110(1). Two related submissions in support of that contention were made. The first was that s 110(1) authorised an authorised officer to exercise its powers only for the purposes of “this Act”, ie, the WRCA, and not for the purposes of any other Act. It was submitted that the notice in this case had been served for the purpose of discharging functions vested in the Corporation pursuant to the WorkCover Corporation Act 1994 (“the WCA”). The related submission was that the powers contained in s 110 could be exercised only to facilitate the exercise of powers conferred, and duties imposed, by particular provisions of the WRCA and that there was no particular provision of the WRCA vesting either a power or a duty in the Corporation to which the purpose of the Notice served on the appellant could be said to be reasonably related.
Section 110: the Purposes of this Act
Aspects of s 110 were considered by the Full Court in WorkCover Corporation v BHP; Jagermann v WorkCover Corporation[2] in answering special cases stated on questions of law. Two particular purposes of the WRCA for which the s 110(1) powers could be exercised were considered. In the BHP case, it was held that the powers contained in s 110(1) could be exercised by an authorised officer for the purpose of assisting the Corporation to decide whether it should exercise the entitlement conferred on it by s 54(7) to recover from a third-party tortfeasor the compensation which it had paid to an injured worker. In Jagermann, it was held that the power contained in s 110(1)(g) may be exercised to require a medical practitioner to answer questions relating to the treatment by him of a patient if those questions were asked for the purpose of an investigation into the commission of an offence against s 120(1) of the WRCA in connection with a claim by the patient for compensation under the WRCA.
[2] (1999) 73 SASR 393.
Doyle CJ (with whom both Bleby and Martin JJ agreed) held that the expression “the purposes of the Act” in s 110(1) did not extend to every matter which might advance or promote the general objects of the WRCA as specified in s 2 of that Act. Rather, the s 110(1) powers could be exercised to facilitate the execution by the Corporation of powers conferred, and duties imposed, by particular provisions of the WRCA. This is apparent in the following passages:
The starting point must be the opening words of s 110(1). In my opinion the natural meaning of those words is that the powers are conferred to be used by an authorised officer to enable the Corporation to discharge the various powers and obligations conferred by particular provisions of the Act. In my opinion the powers are not available to be exercised simply because their exercise might advance the objects of the Act. For example, the powers could not be exercised to require a person who has useful ideas about ‘the efficient and effective administration of the scheme’ (see s 2(1)(b) of the Act) to produce any document expressing those ideas or to answer questions about them. Subject to that, in my opinion the natural meaning of s 110(1) is that the powers are available to be exercised when their exercise will assist the Corporation in the discharge of its statutory powers and obligations.
…
I accept that the powers conferred are to be interpreted bearing in mind that they impinge upon important common law rights and liberties. But in my opinion the conferral of the powers for the purposes of the Act is a clear indication that the powers can be used to assist in the execution of powers conferred by and duties imposed by particular provisions of the Act, as distinct from matters that might be said to be done in the execution of the more general objects of the Act.[3] (Emphasis added.)
In short, in the judgment of the Full Court, “the purposes of this Act” to which s 110(1) refers are the duties imposed and powers conferred by particular provisions of the WRCA. The objects of the WRCA as specified in s 2 are not “the purposes of this Act” to which s 110(1) refers.
[3] (1999) 73 SASR 393 at 397.
In the BHP and Jagermann cases, the respective special cases identified the statutory provisions to which the intended use of the s 110(1) powers was intended to relate: s 54(7) in the case of BHP and s 120 in the case of Dr Jagermann. In the present case, the respondent did not identify any particular provision of the WRCA vesting in the Corporation a power or duty to which it was said the exercise of the s 110(1) powers was directed. Rather, as will be seen below, the respondent referred to the general objects of the Act contained in s 2 and to the functions of the Corporation as specified in s 13 of the WCA.
The WorkCover Corporation Act 1994
When the WRCA was first enacted in 1986 it established, by Part II, the Corporation (then known as the Workers Rehabilitation and Compensation Corporation) and vested the administration and enforcement of the Act in it. However, in 1994 the WorkCover Corporation Act was enacted and Part II of the WRCA repealed. By s 4 of the WCA, the Corporation was continued in existence but to be known as the WorkCover Corporation of South Australia. Part II of the WCA contained a specification of the objects of the WCA. Section 12 provides:
12—Primary objects
The Corporation's primary objects are—
(a)to reduce, as far as practicable, the incidence and the severity of work-related injuries; and
(b)to ensure, as far as practicable, the prompt and effective rehabilitation of workers who suffer work-related injuries; and
(c) to provide fair compensation for work-related injuries; and
(d)to keep employers' costs to the minimum that is consistent with the attainment of the objects mentioned above.
Section 13 of the WCA specifies the functions of the Corporation. As at 30 June 2004, s 13 provided (relevantly to the appellant’s submission):
13—Functions
(1)     The functions of the Corporation are—
(a)    to administer—
(i) the Occupational Health, Safety and Welfare Act 1986; and
(ii) the Workers Rehabilitation and Compensation Act 1986; and
(iii)     other legislation prescribed by regulation; and
…
(c)to promote the rehabilitation of persons who suffer disabilities arising from employment; and
(d)to manage, and ensure the financial viability of, funds that come under its control; and
(e)to ensure the efficient and economic operation of the workers rehabilitation and compensation scheme under the Workers Rehabilitation and Compensation Act 1986, to keep all aspects of that scheme under review, and, if appropriate, to make recommendations for change; and
…
(k)to initiate, carry out, support or promote research, projects, courses, programs, activities or other initiatives relating to—
(i)     occupational health, safety or welfare; or
(ii)    work-related disabilities; or
(iii)     workers rehabilitation; or
(iv)     workers compensation; and
(l)     to collect, analyse and publish information and statistics relating to—
(i)     occupational health, safety or welfare; and
(ii)    workers rehabilitation; and
(iii)     workers compensation; and
…
Section 14(1) provides that the Corporation has the powers necessary for, or incidental to, the performance of its functions.
The Purpose of the Notice Served on the Appellant
A starting point for consideration of the appellant’s submissions is to identify the purpose for which the Notice was served on him. Ordinarily, one would think that the relevant mind to be considered is that of Mr Cannons. He was the authorised officer intending to exercise the powers vested by s 110(1). It is therefore his purpose in exercising the powers which is relevant. However, no evidence was led from Mr Cannons. Instead, the trial was conducted on the basis that Ms Karger’s purpose was the relevant purpose. The respondent’s counsel at trial said in his opening that Ms Karger was being called to give evidence “as to the basis upon which the complainant says that the requirement was for the purposes of the Act”. In her evidence Ms Karger said that it was concerns which she had which led her to make “arrangements for Mr Cannons to prepare or to sign a Notice dated 23 June 2004”. Although the appellant did submit at one stage in the trial that the purposes for which the powers in s 110(1) were being exercised was to be discerned solely from the Notice itself, no point was taken at trial, or on appeal, about the absence of evidence from Mr Cannons. Accordingly, in my opinion, this appeal should be determined on the same basis as was accepted by the parties at trial.
There is a further difficulty. The Magistrate made no finding as to the purpose for which the Notice was served. In my opinion, this was a question of fact and such a finding should have been made. This is because the issue of whether the Notice was served “for the purposes” of the WRCA involved two considerations: what was in fact the purpose of the purported exercise of the powers contained in s 110(1) and secondly, whether that identified purpose was “a purpose of this Act” as that expression is used in s 110(1). The first issue is one of fact. The second issue is one of law.
However, this is an appeal by way of rehearing. No issue was raised at the trial or on appeal as to the credibility or reliability of Ms Karger’s evidence. On the contrary, the appellant relied on a number of aspects of her evidence. In those circumstances it seems to me that I should make my own determination of the purpose of the purported exercise of the s 110(1) powers taking into account all the evidence, both written and oral, which was adduced at trial. The relevant time for the assessment of the purpose is 23 June 2004. It is not appropriate to identify a purpose in retrospect to which the service of the Notice might have been directed if that was not an actual purpose at the relevant time.
The Notice served on the appellant specified that his records were required for the purpose of the Corporation conducting a review of the charges he had rendered to the WorkCover clients for his professional services and a review of the claims by those clients for compensation including a review as to the extent and cost of the treatment for their injuries. Thus, the Notice identified what it was that the Corporation intended to do with the books and records which it sought. It did not, however, identify any particular provision of the WRCA itself pursuant to which the reviews were to be conducted. In his opening at the trial, counsel for the respondent contended that the Corporation had the power to conduct “an audit” of a “service provider” whose charges were paid by it as compensation. It was contended that “the powers of an authorised officer can be used to ensure the financial viability of the scheme by checking up or auditing providers of services such as medical or psychological services”.
Ms Karger gave evidence of her role in monitoring the services and charges of persons whom she described as “service providers”. This included medical practitioners and psychologists providing treatment to injured workers. She referred in this regard to the “statutory obligations [of the Corporation] to ensure the efficient and economical running of the scheme”. Although Ms Karger did not say so, this seems to be a reference to s 13(1)(e) of the WCA. Ms Karger described a process by which the Corporation, using its statistical database, compared the services and charges of service providers within the one profession. It was thereby able to identify those service providers whose services and charges were markedly above the average for that professional group. Ms Karger said that there were three ways in which the Corporation might proceed in respect of such providers. However, in her evidence she described only two of those methods. The first method involved a letter to service providers pointing out that his or her services or charges were well above the average for the relevant profession and inviting the service provider to review himself or herself the manner of treatment and the amount of charges. The second method involved requesting the service provider to attend interviews at the Corporation with an officer of the Corporation and a consultant from the provider’s profession. It was explained that at the interview it was hoped that the service provider would provide information which could lead to education or counselling of the provider with the aim, where appropriate, of producing a change in the “service behaviour” of that provider.

In the case of the appellant, Ms Karger said that her review of the statistical and claims data revealed some matters of concern to her, namely, billing by him for services on weekends, billing of services as initial services when it was not the first time that the appellant had seen the client, duplication of billing, the existence of charges for consultations in respect of which the injured worker had not submitted a claim for compensation for travel costs and the fact that there was a small number of patients who had been treated by the appellant over a substantial period of time. Ms Karger said that this last issue gave rise to a concern as to whether the patients were receiving the appropriate treatment. The records of the appellant were sought so that these issues could be explored. Inferentially, her evidence suggested that the review may lead to education or counselling of the appellant of the kind to which earlier reference was made. Ms Karger stated expressly that the records of the appellant were not sought for the purposes of assisting the Corporation in the determination of the individual claims made by any one of the 19 clients. In his opening, counsel for the respondent said expressly that it was not alleged that there was any evidence of dishonesty by the appellant. This seemed to be a disavowal of the use of the s 110(1) powers for the purposes of investigation of the commission of a possible offence or offences.
On the basis of Ms Karger’s evidence, and the opening of the respondent’s counsel at trial, it should be concluded, in my opinion, that the records of the appellant were being sought in order to assist the Corporation in carrying out a form of “audit” or “monitoring and review” of the services provided by the appellant to the WorkCover clients and of his charges to them. That review was not being carried out for the purposes of assisting in the determination of any claim, nor any possible re-determination of an existing claim, nor as part of an investigation as to whether any offence contrary to s 120 had been committed.
Having identified that purpose, I turn then to consider whether that is a purpose for which the s 110(1) powers may be exercised.
It was not suggested by the respondent that there was any particular provision of the WRCA which authorised the Corporation to carry out an “audit” or review of the services and charges of a service provider of the kind in question. Mr Schroeder, who appeared for the respondent, accepted that the WRCA does not contain any provision expressly empowering the Corporation to engage in the education or counselling of medical service providers, let alone imposing a duty on it to do so. Mr Schroeder sought, in the first place, to justify the Notice by reference to the general objects of the WRCA specified in s 2. The powers were being exercised, he submitted, to promote the “efficient and effective administration of the scheme” (s 2(1)(b)) and to promote “effective rehabilitation of disabled workers” and their early return to work (s 2(1)(a)(ii)). However, as was held by the Full Court in the BHP and Jagermann cases the purpose for which the s 110(1) powers may be exercised is not to be determined by reference to the general objects of the Act. Those objects are not the purposes to which s 110 refers.
Mr Schroeder referred, as had Ms Karger inferentially in her evidence, to the functions contained in s 13 of the WCA. In my opinion, that does not assist the respondent. Section 13 is a specification of the activities in which the Corporation should, or as the case may be, may, engage in administering the Occupational Health Safety and Welfare Act 1986, the WCA and any other legislation prescribed by regulation. Insofar as the Notice was for the purpose of discharging those functions alone, it was not for the purposes of “this Act”, viz, the WRCA. There is of course a sense in which the discharge of those functions may be for the purposes of the WRCA, as they are directed towards the implementation of the WRCA and advancement of its objects. But the purposes of advancing the general objects of the WRCA are not, in the light of the Full Court decision in the BHP and Jagermann cases, the “purposes of this Act” to which s 110(1) refers.
Next, Mr Schroeder referred to s 32 of WRCA. Section 32 provides for the entitlement of an injured worker to be compensated for the medical expenses reasonably incurred by the worker in treatment of a compensable disability. It is sufficient to note that a worker is entitled to recover costs “reasonably incurred”[4] but not the costs of services considered by the Corporation to be “inappropriate or unnecessary”.[5] An injured worker may not recover by way of compensation any amount in respect of a service which exceeds the amount fixed by the Corporation as appropriate for that service.[6] The appellant acknowledged that there may be circumstances in which the Corporation would be entitled to exercise the s 110(1) powers to obtain the records of the kind sought from the him in order to determine whether compensation should be paid in respect of certain claimed expenses. In my opinion, that concession was correct. A requirement of this kind made in good faith may be appropriate in the exercise of the Corporation’s duty, imposed by s 53, to determine a claim for compensation.[7] However, as already noted, Ms Karger acknowledged expressly that the appellant’s records were not sought for the purpose of assisting in the determination of any particular claim. Furthermore, it was not suggested that the books and records were sought for the purpose of a consideration of whether or not there should be a redetermination of a claim for payment of medical expenses which had already been admitted.[8]
[4] s 32(1).
[5] s 32(5).
[6] s 32(4).
[7]See in particular s 53(1) which requires the Corporation to make such investigations and inquiries as it thinks necessary to determine a claim.
[8] See in this regard WRCA s 53(7), (7a) and (8).
Reference was made in the course of submissions to s 64 of the WRCA. That section requires the Corporation to “establish and maintain” the Compensation Fund. The amounts paid by employers by way of levies are to be paid into the Compensation Fund. Pursuant to s 64(3) the Compensation Fund is to be applied, amongst other things, to the payments of compensation which the Corporation is liable to make under the WRCA. It may well be implicit in s 64 that the Corporation is empowered to carry out from time to time reviews of the payments of compensation made from the Fund with a view to satisfying itself that each of those payments was properly and lawfully made. This could be an aspect of “maintaining” the Fund. There may be circumstances in which the powers contained in s 110(1) may properly be exercised to assist in such a review. However, it was not suggested by Ms Karger that that was the purpose in this case. As already noted, it is not sufficient to identify in retrospect a power or duty to which the service of the Notice might have related.
Finally, Mr Schroeder emphasised that the matters of concern to Ms Karger related to actual claims for compensation which had been submitted to and paid by the Corporation. He submitted that this distinguished the present case from the circumstances of the example given by the Chief Justice in the first paragraph of the passage quoted above from the judgment in BHP regarding the person who had useful ideas about the efficient and effective administration of the scheme. As I understood the submission, it was suggested that because the proposed review by WorkCover related to actual claims it was authorised as an incident of the Corporation’s powers and obligations in administering the workers’ compensation scheme. I agree that there is a distinction between this case and the example given by the Chief Justice. That distinction does not, however, alter the necessity of being able to identify a particular provision or particular provisions of the WRCA vesting in the Corporation a power or a duty to which the intended operation of the s 110(1) powers is intended to relate.
Conclusion
For the reasons given above, my opinion is that the “auditing” or the “monitoring and review” of service providers as disclosed in the evidence in this case was not for the purpose of assisting in the exercise of a power or duty vested in the Corporation by a particular provision of the WRCA. That being so, s 110(1) did not empower Mr Cannons to require the appellant to produce to him the books and records specified in the Notice served on 23 June 2004. The refusal of the appellant to comply with the requirements of the Notice was not a refusal to comply with a requirement under s 110 within the meaning of s 110(9)(b) of the WRCA.
This decision should not be understood as a conclusion that the Corporation may not carry out audits or reviews of the services or charges of service providers of the kind in question. Such audits and reviews may well be authorised by s 13 and s 14 of the WCA. It has not been necessary for me to decide that question. All I have decided is that the carrying out of an audit or review of the kind in question in this case is not a purpose of the WRCA within the meaning of s 110(1).
In my opinion the appeal should be allowed and the decision of the Magistrate finding the charge proved set aside. The appellant should be acquitted of the charge. I will hear the parties as to further orders.