Quark Technologies Pty Ltd & Paul Phillip Hocking v WorkCover Corporation of South Australia No. Scgrg-95-1504 Judgment No. 6367 Number of Pages 13 Administrative Law

[1997] SASC 6367

IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA

COX, PERRY AND DEBELLE JJ

CATCHWORDS:

Administrative law - judicial review on grounds of ultra vires or defective exercise of powers - failure to exercise discretionary power - Workers Rehabilitation and Compensation Actss3,10 - authorized officers appointed by WorkCover to use s110 coercive powers during claims investigations - restricted appointment policy - policy applied inflexibily - WorkCover refused to entertain first plaintiff's application as it did not fall within the policy - whether refusal lawful. Workers Rehabilitation and Compensation Act 1986ss3, 14, 53, 63, 110; WorkCover Corporation Act 1994s13, referred to. R v Port of London Authority; ex parte Kynoch Ltd [1919] 1 KB 176, applied. Breen v Amalgamated Engineering Union [1971] 2 QB 175; McInnes v Onslow-Fane [1978] 1 WLR 1520; Attorney-General (NSW) v Quin (1991) 170 CLR 1, discussed.

HEARING:

ADELAIDE, 14-15 July 1997 (hearing), 3 October 1997 (decision)

#DATE 3:10:1997

#ADD 13:10:1997

Appearances:

Plaintiffs:

Counsel: Mr D W Smith and Mr C H Goodall

Solicitors: Alderman Redman

Defendant:

Counsel: Mr T A Gray QC with him Mr T R Baldock

Solicitors: Thomsons

ORDER: Case stated.

COX J

The issues in this case are described in the reasons of Debelle J which I have had the advantage of reading and with which I agree. I add a few comments of my own.

Sections 3 and 14 of the Workers Rehabilitation and Compensation Act 1986, read together, in effect confer power on the WorkCover Corporation to authorize any person (an "authorized officer") to exercise any of the investigatory powers set out in s110 of the Act. The Act does not set up anything like a licensing system for authorized officers. Nothing is said about interested persons applying to the Corporation for a s3 authority and nowhere are there laid down the terms and conditions upon which an authority will be issued. From this WorkCover argued that it may exercise its power to grant s110 authorities in any manner it sees fit. However, the cases show that the restraints upon the making of arbitrary decisions by an administrative body exercising a statutory discretion are not confined to those administering a conventional licensing system. Then it was said that s13 of the WorkCover Corporation Act 1994 confers on WorkCover the responsibility of administering the Workers Rehabilitation and Compensation Act and that this, coupled with WorkCover's duty to investigate claims under s53 of the latter Act, makes the grant of an investigatory authority a purely domestic matter for WorkCover in which no-one else can have any legitimate right or interest. The argument would have force if the investigation of claims and related matters under the Workers Rehabilitation and Compensation Act were the responsibility of WorkCover alone. However, an exempt employer has a statutory duty to investigate claims for compensation made against it - see ss53 and 63 - and it is clear from Debelle J's analysis of the legislation that the proper investigation of such a claim may require the exercise of the authority and coercive powers set out in s110. It follows, in my opinion, that the Corporation is obliged to consider on its merits any application for an authority made in such circumstances by an exempt employer or a person who is investigating on behalf of an exempt employer a claim made against it. It is open to WorkCover to adopt a policy, as to the type or class of persons to whom authorities will be issued, that it considers will advance the purposes of the legislation. However, that can never be more than a general policy that WorkCover will review when requested to do so by a person affected by it, at least until all reasonable debate on the subject has been exhausted, and it must be willing to entertain any individual application for an authority and determine it on its merits while at the same time having regard, if it sees fit, to its general policy. (For an illustration of the difficulty that may be involved in getting this right, see Brian Cassidy Electrical Industries Pty Ltd v Attalex Pty Ltd [1984] 3 NSWLR 52.) It follows that the Corporation cannot take the attitude that under no circumstances will it delegate s110 powers to a person who is not an accredited provider, for that would be to close its mind to any application that did not conform with its general policy. To that extent, in my opinion, it went beyond its statutory powers when it published its letter of 8 June 1995.

I would answer the questions in the case stated as follows - 1. The intention expressed by the defendant in its letter of 8 June 1995, namely, that under no circumstances will WorkCover authorize the use of s110 powers by a person who is not an accredited provider, is unlawful.

2. No.

PERRY J

I am in substantial agreement with the reasons of Debelle J, and with the additional observations made by Cox J.

For my part, the critical feature of the case is that an authority to conduct investigations of the kind identified in s110 of the WorkersRehabilitation and Compensation Act 1986 may be sought in aid of the investigation of a claim for which an exempt employer is responsible, to the exclusion of WorkCover. I agree that in such circumstances, WorkCover is obliged to consider the application for authorisation on the merits.

I agree that the questions in the case stated should be answered in the terms suggested by Debelle J.

DEBELLE J

The issues in this case stated concern the appointment of authorised officers under the Workers Rehabilitation and Compensation Act 1986 ("the Act"). Authorised officers are able to exercise certain compulsive powers when investigating claims for compensation under the Act. The plaintiffs seek appointment as authorised officers. WorkCover has refused their application.

Section 3 of the Act defines an authorised officer in these terms:

"'Authorised officer' means a person who is authorised by the Corporation to exercise the powers of an authorised officer under this Act."

The Corporation mentioned in that definition is the defendant WorkCover Corporation of South Australia ("WorkCover"). Section 110(1) of the Act invests authorised officers with extensive powers of entry and inspection. It 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 the Act.

Section 110 also contains extensive provisions prescribing restraints and limits on those powers so as to ensure that these powers are fairly executed. Those restraints give effect to such principles as legal professional privilege and the privilege against self-incrimination. It is unnecessary for present purposes to note the content of these restraints.

The Agreed Facts

The plaintiffs have sought appointment as authorised officers. Their application has been refused by WorkCover. The plaintiffs commenced an application for judicial review to quash decisions made by the defendant refusing the grant of authorisation. The parties agreed to state a case for the consideration of the Full Court. It appears that they have determined a basis on which the issues between them can be resolved and that will depend on the answers to the case stated. For the purpose of the case stated the parties have agreed the following facts. A number of documents are attached to the case stated. It is unnecessary to repeat the terms of those documents. 1. The plaintiffs are licensed commercial and private agents pursuant to the provisions of the Commercial and Private Agents Act 1986 (as amended) and have conducted investigations and surveillance work, inter alia, in personal injuries and workers compensation areas in the name of the firstnamed plaintiff (hereinafter referred to as "Quark") since 1986.

2. The sole directors and shareholders of Quark are the secondnamed plaintiff, and his wife Maureen Susan Hocking.

3. The defendant was established by the Workers Rehabilitation and Compensation Act 1986 ("the Act") and continues as the WorkCover Corporation of South Australia ("WorkCover") under the WorkCover Corporation Act 1994 ("WCA") (Section 4) and has the function (Section 13), inter alia, of administering the Act.

4. The Act provides for the rehabilitation and compensation of workers and sets up a scheme whereby such matters are managed by WorkCover or by "exempt employers". Exempt employers include a range of significant employers, such as General Motors Holden, Woolworths Limited and the Crown in right of the State of South Australia, and its agents and instrumentalities. WorkCover has the power under the Act to enter into an authorised contract or arrangement with private sector bodies to manage and determine claims, provide rehabilitation services and implement and manage return to work programmes.

5. Certain powers and discretions of WorkCover have been delegated:- (a) to exempt employers pursuant to the Act, (Section 63); and (b) private sector bodies (the claims agents) pursuant to the WCA (Section 17) effected by Regulation 3 of the WorkCover Corporation (Claims Management - Contractual Arrangements) Regulations 1995.

6. There are no delegations to either exempt employers, or to claims agents, of the power to authorise persons under Section 110 of the Act.

7. Section 110 of the Act confers powers of entry, inspection, compulsory interrogation and compulsory production of relevant documents, as well as seizure of evidence on reasonable suspicion of an offence against the Act having been committed. It operates in conjunction with Section 3 of the Act (which defines "authorised person").

8. Two broad categories of compensation claims in relation to which the powers under Section 110 of the Act may be used are:- 1. Claims managed by or on behalf of WorkCover under the Act ("WorkCover Managed Claims"). This category of managed claims includes claims which are managed by some employers who are not exempt employers (see subparagraph (2) below) but who WorkCover has authorised to manage claims made by their employees ("Self Managed Employers"). 2. Claims managed by or on behalf of "exempt employers" who are registered as exempt employers pursuant to Division 1 of Part 5 of the Act ("Exempt Employer Managed Claims").

9. Until 31 July 1995 the WorkCover Managed Claims (except the claims managed by the Self Managed Employers) were managed by WorkCover's own staff. From 1 August 1995 WorkCover outsourced certain aspects of the management of the WorkCover Managed Claims to a panel of nine insurance companies; hereinafter referred to as WorkCover's "Claims Management Agents".

10. The Claims Management Agents are free to engage any appropriately qualified and licensed investigator to carry out investigations in respect of the claims that they are managing on behalf of WorkCover. However, WorkCover has retained control over the investigation of any fraudulent conduct in respect of any claim.

11. Exempt employers have had certain of WorkCover's claims management powers under the Act delegated to them by the Act. Despite the title, the exempt employers are part of the rehabilitation and compensation scheme established pursuant to the Act.

12. The exempt employers are free to engage any appropriately qualified and licensed investigator to carry out investigations in relation to the claims for compensation that they are managing.

13. WorkCover is the only entity or person which may authorise persons to exercise the powers of an authorised officer under the Act.

14. Briefly, investigation services may be used in the management of compensation claims as follows:- (a) Surveillance Surveillance is the observation and reporting, in writing or by photograph, film, etc., of the actions of a claimant for compensation together with the making of such inquiries as are necessary to ensure that the required surveillance may be effected. Surveillance may be undertaken both in the management of claims and in fraud investigations, and is usually undertaken by an investigation firm appointed by a claim manager. Section 110 authorisations are not necessary to conduct surveillance. (b) Field Inquiries Field inquiries are the inquiries that are necessary for the management of a claim for compensation, including the assessment and determination of an entitlement to compensation. Field inquiries are also made after the grant of compensation if necessary for the management of the payment of compensation; e.g. in relation to the level of disability etc. Investigation firms and/or licensed investigators may be engaged by the claim manager to conduct some or all of the field inquiries relating to a claim for compensation.

There are only limited categories of claims in relation to which Section 110 authorisations may be necessary to conduct field inquiries. Those categories are:- (1) Stress claims; (2) Where the claim relates to a death or a serious injury; (3) Where a claim has been made by working director; (4) Where a claimant has two or more employers.

There may be special circumstances in a particular case not coming within the above listed categories where a Section 110 authorisation is necessary for the proper management of a claim. However, WorkCover has rarely considered that such special circumstances have existed. If WorkCover considers an authorisation should be given to exercise any of the Section 110 powers in the conduct of the limited categories of the field inquiries referred to above, WorkCover authorises a suitable person from one of the accredited providers of investigation services. WorkCover then monitors closely each exercise of the Section 110 powers to ensure that such powers are exercised properly and not abused. (c) Fraud Investigations Fraud investigations are those initiated by WorkCover if fraud is suspected in relation to a claim for compensation.

Subject to seeking an authorisation under Section 110 where necessary, Exempt employers may investigate suspected fraud themselves. Claims Management Agents and Self Managed Employers are each required by WorkCover to refer each case of suspected fraud to WorkCover for WorkCover to investigate. WorkCover has always undertaken and continues to undertake its own investigations in relation to suspected fraud. In undertaking its investigations, WorkCover will seek assistance from any relevant exempt employer, Claims Management Agent and/or Self Managed Employer and any investigators that have been engaged in relation to the particular matter. WorkCover retains control of all fraud investigations that are referred to it by Claims Management Agents and Self Managed Employers. If WorkCover considers that the powers provided under Section 110 of the Act should be exercised in connection with a particular fraud investigation, WorkCover authorises a suitable person from one of the accredited providers of investigation services to exercise those powers for the purpose of that investigation. WorkCover then monitors closely each exercise of the Section 110 powers to ensure that such powers are exercised properly and not abused.

15. WorkCover has only one policy for Section 110 authorisations and since 1 August 1995 has applied that policy to both WorkCover Managed Claims and Exempt Employer Managed Claims.

16. From 1976 to 1980 the secondnamed plaintiff was employed in the Northern Territory Police Department. At the time of his resignation, he was a Detective First Class Constable with Darwin CIB. From 1980 to 1985 he was employed with Riedel Investigation Services.

17. When Quark commenced business in 1986 its only staff were the secondnamed plaintiff and his wife. Initially their work was on referral from loss assessors who wished to undertake surveillance of persons claiming damages and compensation for personal injuries.

18. In December 1986 Quark received its first instructions from the Government Workers Rehabilitation and Compensation Office (then the Department of Labour) to conduct surveillance in respect of claimants for workers compensation from the State Government. These claims were referred to the Crown Solicitors Office for advice. Quark was subsequently instructed to undertake investigations on behalf of the Crown Solicitors Office.

19. Quark claims that:- 1. Quark gradually built up its business with instructions from the Crown Solicitors Office and other government departments such as Woods and Forests, E & WS, the Education Department and Marine and Harbours Department. 2. During the course of 1987 the business continued to expand with Quark receiving instructions from insurance brokers, loss assessors, solicitors, SGIC compulsory third party and insurance companies. 3. The work comprised of investigations and surveillance for various clients in metropolitan Adelaide, country areas of South Australia, New South Wales, Victoria, Northern Territory and Western Australia.

20. Following the introduction of the Act and the establishment of WorkCover, Quark approached WorkCover with a view to obtaining work.

21. Quark received its first instructions from WorkCover on 7 January 1988. Thereafter it received instructions from WorkCover at a steady rate.

22. In or about 1989 Quark was informed by WorkCover that it had been placed on a panel of investigators ("the initial panel"), which persons were to be used by WorkCover to conduct investigations and surveillance.

23. In or about 1990 or 1991 WorkCover commenced issuing authorities to the secondnamed plaintiff to exercise the powers contained in Section 110 of the Act. The procedure initially adopted by WorkCover was that Quark would receive instructions from WorkCover, and Quark would then advise WorkCover of the particular Quark investigator who would be handling the file. WorkCover would then issue an authority authorising the investigator to exercise the powers contained in Section 110. That authority would be faxed to Quark.

24. In about 1991 WorkCover provided Quark with a Manual headed "Investigation - Enquiry Standards Field Inquiries" and sought information from Quark and the other firms providing services to WorkCover about WorkCover's Performance Standards and Terms and Conditions of Appointment (as set out in the Manual). All firms which met this criteria continued to receive instructions from WorkCover.

25. Following the process referred to in paragraph 23, Quark continued to receive instructions from WorkCover.

26. By letter dated 15 June 1992 WorkCover wrote to Quark advising that at this time, no further work would be referred to it. 27. Quark claims that in a subsequent conversation between Mr Bo Janic, an employee of WorkCover, and the secondnamed plaintiff, Mr Janic informed the secondnamed plaintiff that Quark was no longer on the WorkCover panel, but that this would not affect Quark's ability to perform services for exempt employers. 28. At that stage Quark's clients included exempt employers under the Act. In particular, Quark was instructed from time to time by the Crown Solicitors Office, acting for the Crown (which is deemed to be an exempt employer pursuant to Section 61 of the Act).

29. As at about June 1992, Quark employed three full time investigators, and one casual investigator. It also employed one full time office staff member, and one casual, together with the secondnamed plaintiff, and his wife. In addition to work received from the Crown Solicitors Office and the Government Workers Rehabilitation and Compensation Office, Quark received instructions from time to time from various exempt employers.

30. Prior to Quark's removal from the initial panel, no applications by exempt employers for an authorisation for Quark employees to exercise the powers contained in Section 110 were refused.

31. Quark claims that following its removal from the initial panel, Quark continued to perform investigations and surveillance work for exempt employer clients. However, the problem of obtaining Section 110 authorities arose for the first time.

32. For example, on one occasion in early 1994, the Crown Solicitors Office applied for an authorisation for the secondnamed plaintiff pursuant to Section 110 to enable further investigations to be pursued. WorkCover refused to grant the authorisation. Upon making a telephone enquiry of Mr Stan Rybajalak, an employee of WorkCover, as to why the Section 110 authorisation had been refused, Mr Rybajalak advised the secondnamed plaintiff that it had been refused because Quark was not on WorkCover's panel. The secondnamed plaintiff advised that he was working in the capacity of a government investigation officer, and that he had a Crown Solicitor's authority and provided a copy of the same to WorkCover. Mr Rybajalak persisted in his refusal. Following further representations made to WorkCover, by Mr Ian Sheppard and Virginia Martindale on behalf of the State Crown Solicitor's Office, Mr Rybajalak subsequently agreed to grant the authorisation which had been sought, but indicated that it would be a "one-off" authorisation.

33. Quark claims that some time after obtaining the said authorisation, the secondnamed plaintiff had a discussion with Mr Trent Fuller, the then head of the WorkCover Fraud Section that; Mr Fuller advised the secondnamed plaintiff that as Quark was not on the WorkCover panel, WorkCover would not issue an authority under Section 110, irrespective of whether Quark was acting for an exempt employer or a government agency; and that; at that time the secondnamed plaintiff complained that the policy was causing Quark loss of work.

34. The secondnamed plaintiff subsequently made contact with Ms Sue Magtengaard of the WorkCover Fraud Section. Ms Magtengaard advised Quark that it would not be placed on the WorkCover panel at that stage, but that Quark could provide WorkCover with information regarding specific services Quark could offer for future consideration. In a subsequent telephone conversation, the secondnamed plaintiff indicated to Ms Magtengaard that he was concerned about the policy of refusing to issue Section 110 authorities to Quark employees because it was not on the initial panel. Ms Magtengaard responded that as Quark was not on the initial panel, no Section 110 authorisation would be issued.

35. By letter dated 17 October 1994 WorkCover forwarded a letter to Quark (and other investigator firms) inviting Quark to make submissions for the purpose of being considered for inclusion on a new panel of providers of factual investigation and surveillance duties of WorkCover.

36. Quark submitted a detailed written submission to WorkCover seeking inclusion upon the panel of providers in November 1994.

37. By letter from WorkCover to Quark dated 19 December 1994 WorkCover advised that the panel of providers (later to be known as the panel of accredited providers) had been chosen, but that notification of successful applicants had been temporarily suspended.

38. By letter dated 30 January 1995 from WorkCover to Quark WorkCover advised that Quark had not been successful.

39. Upon receipt of that advice Ms Maureen Hocking telephoned Mr Mal Millikan of WorkCover (a member of the selection panel) and sought feedback upon Quark's non-selection to the panel of providers.

40. By letter dated 22 February 1995 Quark wrote to WorkCover formally requesting a response to a series of questions arising from the selection process. WorkCover responded by letter dated 21 March 1995.

41. Between January 1995 and 8 June 1995 there were three applications by exempt employers seeking a Section 110 authority on behalf of employees of Quark. In each case an employee of Quark was not authorised and Quark's instructions were subsequently terminated. In particular, on about 28 March 1995 a solicitor in the employ of the Crown Solicitors Officer, namely Ms Judith Hughes, submitted an application for the secondnamed plaintiff. On the same day Ms Hughes was notified by telephone by a Mr Martin Taylor, an employee of WorkCover, that the application was refused and that the secondnamed plaintiff would not be authorised under Section 110.

42. By letter dated 8 June 1995 from WorkCover to Quark, WorkCover advised Quark as follows:-

"RE: USE OF INVESTIGATION AND SURVEILLANCE FIRMS

Various firms have sought clarification regarding the guidelines for the use of Investigation Firms to undertake Case Management Surveillance and Case Management Investigations.

In terms of surveillance and investigations related to management of a claim the Agent may select any appropriately qualified operative to undertake surveillance or make enquiries on their behalf.

Section 3.4.2 of the Workers Rehabilitation and Compensation Manual sets down the typical scenarios when case management investigations should be undertaken.

It should be noted that any matter where the Agents suspects fraud must be referred to the Fraud Prevention Department and the matter will be investigated by that department and utilise the services of accredited providers only. Fraud related surveillance will only be undertaken by accredited providers.

A copy of the accredited providers list is provided in the manual and it should be noted that Section 110 authorities will only be issued to accredited providers. Under no circumstances will the Corporation delegate Section 110 powers to any unaccredited provider.

Sections 3.4.3 and 5.3 are currently being amended to reflect the above limitations and will be forwarded to agents with the first amendment schedule.

Should you require any further information please do not hesitate to contact the undersigned on 233 2503 at your convenience.

Yours sincerely

Sue Magtengaard MANAGER-FRAUD PREVENTION"

43. By letter dated 3 July 1995, the solicitors for the plaintiffs wrote to WorkCover in connection with Quark's inability to obtain Section 110 authorities.

44. By letter dated 12 July 1995, the solicitors for WorkCover, Messrs Thomsons, responded to Quark's solicitors.

45. Quark claims that:- (a) The lack of ability to obtain Section 110 authorisations means that Quark cannot provide a complete investigation service to these clients in claims where relevant witnesses will not cooperate and in some cases where fraud may be involved. (b) This inability of Quark's employees to obtain authorisations to exercise the powers provided by Section 110 of the Act has resulted in a loss of work, and therefore loss of income.

46. Since August 1995 Quark has received instructions from certain claims management agents, in addition to exempt employers.

47. Quark claims that on 7 August 1995 Quark employed a marketing consultant, Mr John Anthony Daniels, in order to assist Quark undertake marketing and in particular to encourage work for Quark which did not require Section 110 authorities. Further, it is asserted that Quark has offered clients and potential clients a discount on its fees if it transpires that a Section 110 authority is required, and it subsequently becomes necessary for Quark's client to instruct another investigation company.

48. Since June 1995 WorkCover has produced and distributed a Manual to claims management agents and exempt employers outlining WorkCover's policies, and to provide guidelines for agents for managing WorkCover claims.

49. There has been no amendment to, or supplementary appointments to, the panel of accredited providers since its establishment in January 1995.

The Questions

The points reserved for consideration for this court are:

1. Is the attitude or intention expressed by WorkCover in its letter of 8 June 1995 lawful or unlawful?

2. Is WorkCover entitled to refuse to grant an authorisation to use powers under s110 on the grounds that the second plaintiff is not an employee of an accredited provider?

The Respective Contentions

The plaintiffs' case is that s3 and s110 of the Act invest WorkCover with a discretion to appoint authorised officers and that WorkCover has unlawfully fettered the exercise of that discretion by limiting the persons who will be appointed authorised officers to accredited providers. That fetter, they say, is expressed in the letter of 8 June 1995 recited in paragraph 42 of the agreed facts. It is convenient to repeat that part of the letter which contains the alleged fetter:

"A copy of the accredited providers list is provided in the manual and it should be noted that Section 110 authorities will only be issued to accredited providers. Under no circumstances will the Corporation delegate Section 110 powers to any unaccredited provider."

The plaintiffs say that, by limiting authorised persons to those it calls accredited providers, WorkCover has effectively precluded the plaintiffs from applying to be authorised. The plaintiffs know that it is futile to apply because their application will be automatically rejected.

WorkCover's answer is that it is implicit in the plaintiffs' submission that the power of WorkCover to grant authorisations created a kind of licensing system and that was to read too much into the definition of "authorised officer" in s3. Nowhere in the Act can one find an entitlement to apply for authorisation; there is no group of persons who can be readily identified as being entitled to benefit from the exercise of the power to grant authorisation; the Act does not require WorkCover to call for applications; the Act does not prescribe a procedure for determining applications nor any criteria for determining who are appropriate persons to be appointed as authorised officers; and the Act does not express any duty in WorkCover to consider applications made to it. Thus, WorkCover says, it had an unfettered discretion as to the appointment of authorised officers and was at liberty to adopt whatever policy it chose. Relying on decisions such as Breen v Amalgamated Engineering Union [1971] 2 QB 175 at 191, McInnes v Onslow-Fane [1978] 1 WLR 1520 and Attorney General (NSW) v Quin (1991) 170 CLR 1 at 59, WorkCover submitted that in the absence of special circumstances, an applicant for an appointment to a position has no legitimate expectation to be heard. However, an examination of the scope and objects of the Act belies this submission.

The Power to Appoint Authorised Officers

The only reference to any power in WorkCover to appoint authorised officers is to be found in the definition of "authorised officer" in s3 of the Act. Section 14 of the WorkCover Corporation Act, 1994 invests WorkCover with the powers necessary for the performance of its functions. When the definition in s3 and s14 are read together, there is clearly a power vested in WorkCover to appoint authorised officers.

The Act imposes on both WorkCover and exempt employers a duty to investigate claims by workers for compensation: see s53 and s63 of the Act. WorkCover and exempt employers may either appoint employees to act as investigators or contract with independent agents to provide that service. In addition, WorkCover has other duties which may require it to conduct investigations. One of those duties is to ensure that employees are discharging their proper obligations to pay levies: see s65 to s76A of the Act. Another is to prevent breaches of the Act, an obligation which arises under the duty to administer the Act provided in s13 of the WorkCover Corporation Act 1994. But, for the purpose of this appeal, it is necessary only to consider the duty to investigate claims for compensation. In the course of investigating claims, it will be necessary from time to time for the investigator - be the investigator an employee or independent agent of either WorkCover or an exempt employer - to exercise compulsive powers in order to complete the investigation. That need is recognised by s110 and, in particular, by s110(1) which prescribes the range of compulsive powers available to authorised officers.

As the Act requires investigation of claims by both WorkCover and exempt employers and envisages the exercise of compulsive powers by authorised persons as an aid to thorough and complete investigations, WorkCover has a duty to exercise its power to appoint authorised officers and to determine, in the exercise of its discretion, those whom it believes are suitable to be appointed as authorised officers. The policy and objects of the Act as expressed in the requirement that claims be investigated requires that authorised officers be appointed.

In other words, Parliament must have conferred the power on WorkCover with the intention that it should be used to promote the policy and objects of the Act. One of those objects is that WorkCover and exempt employers will investigate claims. In order that the claims may be completely investigated, the Act envisages that WorkCover and exempt employers will appoint investigators to investigate claims and that some of those investigators will have compulsive powers. WorkCover is thus invested by s3 with power to appoint authorised officers and with a discretion to determine who should be appointed. Obviously, WorkCover must exercise its statutory power in order that authorised officers are approved as the Act contemplates. Although it might overstate the position to describe the scheme as a licensing system, it is apparent that investigators appointed by either WorkCover or exempt employers may apply to be appointed as authorised officers and WorkCover must decide whether in the exercise of its discretion it will allow the application.

Relevant Principles

It is well settled that an authority invested with a discretionary power must exercise that power according to the merits of the particular case and not inflexibly apply a policy to cases coming before it irrespective of their merits: R v London County Council; ex parte Corrie [1918] 1 KB 68; R v Port of London Authority; ex parte Kynoch Ltd [1919] 1 KB 176; ex parte Forster; re University of Sydney (1963) 63 SR(NSW) 723. It is, however, lawful for an authority to adopt a policy governing the exercise of discretion provided that it is prepared to depart from that policy in appropriate cases: R v Port of London Authority; ex parte Kynoch (supra) at 184; Marks v Swan Hill Shire Council [1974] VR 896; R v Eastleigh Borough Council; ex parte Betts [1983] 2 AC 613, at 627-628. As Lord Reid said in British Oxygen Co Ltd v Board of Trade [1971] AC 610 at 625:

"The general rule is that anyone who has to exercise a statutory discretion must not "shut his ears to an application" ... I do not think there is any great difference between a policy and a rule. There may be cases where an officer or authority ought to listen to a substantial argument reasonably presented urging a change of policy. What the authority must not do is to refuse to listen at all."

His Lordship then examined how the principle will apply when an authority will have to deal with a multitude of applications. There is no suggestion in this case that WorkCover is required to deal with a great number of applications. It is also necessary that policy be valid and not capable of being set aside as being unreasonable, or based on an improper purpose or irrelevant considerations, or be ultra vires on any other ground: Cumings v Birkenhead Corporation [1972] Ch 12, 37; Green v Daniels (1977) 51 ALJR 463. All that might be summed up by saying that the policy must accord with the scope and objects of the Act.

An Unlawful Fetter

WorkCover has expressed its policy in quite unambiguous terms. The letter dated 8 June 1995 unequivocally states that "under no circumstances will the corporation delegate section 110 powers to an unaccredited provider". It is readily apparent that the policy is wholly inflexible and admits of no exceptions. The policy is, therefore, an unlawful fetter on the discretion of WorkCover to appoint authorised officers. It is an attempt to shut the door indiscriminately on all applications regardless of merit. To use the words of Bankes LJ in R v Port of London Authority; ex parte Kynoch Ltd [1919] 1 KB 176 at 184, it is not the adoption of the policy in the exercise of a discretion but a refusal to exercise any discretion.

It is arguable that the policy is invalid on other grounds. The documents attached to the case stated suggest that WorkCover's policy is founded on a belief that is appropriate to limit the number of authorised officers. It is open to argument that WorkCover has no power to limit the number of persons who are appointed authorised officers but should deal with each application on its merits. There is nothing in the Act that justifies a limit on numbers. Instead, the Act expressly requires authorised officers to be appointed so that exempt employers, as well as Workcover, are in a position to make a complete investigation of claims. A limit on the number of authorised officers has the capacity to jeopardise the ability of exempt employers promptly to investigate claims. It is arguable therefore that the suggested limit is either ultra vires or an irrelevant factor. However, there is no need to pursue that issue given that the policy is invalid on the ground already mentioned.

For these reasons I would answer the questions in the case stated as follows: 1. Q. Is the attitude or intention expressed by WorkCover in its letter of 8 June1995 lawful or unlawful?

A. The intention expressed by the defendant in its letter of 8 June 1995, namely, that under no circumstances will WorkCover authorise the use of s110 powers by a person who is not an accredited provider, is unlawful.

2. Q. Is WorkCover entitled to refuse to grant an authorisation to use powers under s110 on the grounds that the second plaintiff is not an employee of an accredited provider?

A. No.