Smith Management Concepts Pty Ltd t/as Bernadette's Cafe & Restaurant v Truong [2006] ACTSC 16 (10 March 2006)

Last Updated: 6 April 2006

SMITH MANAGEMENT CONCEPTS PTY LTD t/as BERNADETTE'S CAFÉ & RESTAURANT v KHANH VAN TRUONG [2006] ACTSC 16 (10 MARCH 2006)

WORKERS COMPENSATION - EVIDENCE - legal professional privilege - medical report - where medical assessment of injured worker sought and obtained by employer's insurer under Workers Compensation Regulations 2002 (ACT), Pt 3 - requirement that reasons for the request of medical assessment to be communicated to worker - where employer's insurer seeks to claim privilege over subsequent medical report, and use report for legal advice or in anticipated or pending litigation - whether medical report had been obtained for the `dominant purpose' of legal advice or anticipated or pending litigation - worker's counsel making concession that privilege arises relied upon by magistrate - question of privilege should not have been determined on concession alone - matter remitted to Magistrates Court.

Workers Compensation Act 1951 (ACT), s 197

Workers Compensation Regulations 2002 (ACT), s 11(4), Part 3, s 223

Magistrates Court Act 1930 (ACT), s 276, s 277

Evidence Act 1995 (Cth), s 118, s 119

Esso Australia Resources Ltd v The Federal Commissioner of Taxation [1999] HCA 67; (1999) 201 CLR 49

Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3; (1997) 188 CLR 501

Wheeler v Le Marchant (1881) 17 Ch D 675

Pratt Holdings Ltd v Commissioner of Taxation [2004] FCAFC 122; (2004) 136 FCR 357

ON APPEAL FROM THE MAGISTRATES COURT

No. SCA 56 of 2005

Judge: Gray J

Supreme Court of the ACT

Date: 10 March 2006

IN THE SUPREME COURT OF THE )

) No. SCA 56 of 2005

AUSTRALIAN CAPITAL TERRITORY )

ON APPEAL FROM THE MAGISTRATES COURT

BETWEEN: SMITH MANAGEMENT CONCEPTS PTY LTD (ACN 006 579 246) t/as BERNADETTE'S CAFÉ & RESTAURANT

Appellant

AND: KHANH VAN TRUONG

Respondent

ORDER

Judge: Gray J

Date: 10 March 2006

Place: Canberra

THE COURT ORDERS THAT:

1. The matter be remitted to the Magistrates Court.

1. The Workers Compensation Act 1951 (ACT) (the Act) requires that matters and questions arising under that Act be settled by conciliation and arbitration in accordance with the regulations made under the Act. Proceedings by way of arbitration were commenced in the Magistrates Court. By notice of motion dated 13 May 2005, Khanh Van Truong (the worker) sought to have provided to him copies of certain medical reports that Allianz Australia Insurance Limited (the employer's insurer) on behalf of Smith Management Concepts (the employer) had obtained in relation to the worker's medical condition. The employer's insurer claimed legal professional privilege in respect of the reports. The Special Magistrate, before whom the matter came, decided that the claim for legal professional privilege had been abrogated by the enactment of s 11(4) of the Workers Compensation Regulation 2002 (the regulations). The worker appeals that decision.

Appeal to the Supreme Court

2. Section 197 of the Act provides for an appeal from a decision of the Magistrates Court made under the Act. Section 197(2) of the Act applies the Magistrates Court Act 1930 (ACT) to this appeal. There are two provisions of the Magistrates Court Act 1930 that have particular relevance to this matter. Section 276 provides:

In an appeal, the Supreme Court must have regard to the evidence given in the proceeding in the Magistrates Court out of which the appeal arose, and has power to draw inferences of fact and, in its discretion, to receive further evidence.

Section 277(1) provides on an appeal the Supreme Court has the following powers in relation to the judgment or order appealed from:

...

(c) to set aside the judgment or order (completely or in part), and remit the proceeding to the Magistrates Court for further hearing and decision, subject to any directions the Supreme Court considers appropriate; ...

Medical assessments

3. The reports obtained by the employer's insurer in this case were obtained by the employer's insurer utilising the procedure for medical assessment set out in Part 3 of the regulations. Those regulations were supported by the regulation making power in s 223(2)(a) and (b) of the Act make provision for regulation to be made concerning the medical assessment of injured workers and the use of medical specialists in relation to compensable injuries. Sections 10 and 11 of the regulations provide:

10 Assessment by medical specialist--request by other than nominated treating doctor

(1) This section does not apply to a request by an injured worker's nominated treating doctor for a medical assessment of the worker by a medical specialist.

(2) The following (the requesting person) may request a medical assessment of an injured worker by a medical specialist:

(a) the worker;

(b) the worker's lawyer;

(c) the worker's employer;

(d) the employer's insurer.

(3) At least 2 weeks before the day of the medical assessment, written notice of the request must be given--

(a) if the request is made by the worker or the worker's lawyer--to the worker's employer and the employer's insurer; or

(b) if the request is made by the worker's employer or the employer's insurer--to the worker and the worker's lawyer.

(4) Subsection (3) does not prevent a medical assessment of the worker happening with less than the 2 weeks notice if the parties agree to the shorter notice.

(5) The notice must state--

(a) the reasons for the request (including a brief description of any particular thing that led to the request); and

(b) why the medical specialist is the appropriate specialist to do the medical assessment; and

(c) which of the following matters are to be assessed in relation to the injury:

(i) aetiology;

(ii) diagnosis;

(iii) prognosis;

(iv) recommended medical treatment.

Example for par (a)

An insurer disagrees with an injured worker's nominated treating doctor's assessment that the worker has suffered a relapse, and needs more time off work. The insurer considers that the time off does not relate to the injury.

Note An example is part of the regulation, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see Legislation Act, s 126 and s 132).

(6) The requesting person, and the people to whom the requesting person must give notice under subsection (3), must give all medical evidence about the injured worker to the medical specialist at least 2 working days before the day of the medical assessment.

11 Specialist's report about assessment

(1) A medical specialist assessing an injured worker must, when asked by someone (the requesting person) under section 10 (2), prepare a report about the medical assessment.

(2) If the medical specialist's assessment differs from the medical evidence about the injured worker, the report must state--

(a) how the assessment differs and why; and

(b) why the medical specialist's assessment is preferable.

(3) If there is no difference between the medical specialist's assessment and the medical evidence, the report must say there is no difference.

(4) The requesting person must give a copy of the report to the people to whom the requesting person must give notice under section 10 (3) within 5 working days after the day the report is given to the requesting person.

Note An injured worker's nominated treating doctor may adopt (completely or partly) a medical specialist's assessment about treatment for the worker's treatment.

4. The Explanatory Statement made by the Minister under the regulations describes the intended effect of ss 10 and 11 of the regulations in this way:

Regulation 10 distinguishes between medical assessments by specialists that are referred by a person's treating doctor and those that are referred by a worker, employer or their representatives.

This provision is made to distinguish between assessments that are conducted by specialists who are assisting the treating doctor to treat the patient, and assessments that are conducted to confirm or challenge a person's medical condition. This separation of a treatment stream and a reporting stream is intended to prevent the stagnation of medical treatment of an injured person due to litigious factors.

The notice required by regulation 10 ensures that the reasons for any referral to a specialist to confirm or challenge a person's medical condition is known by all parties. The imperative to provide notices also dissuades all parties from `doctor shopping'.

Any medical assessments conducted by medical specialists must be consistent with evidence based methodology.

Regulation 11 states that reports made for the purpose of confirmation or challenge must identify any differences between the specialist's assessment and any assessments conducted by other doctors of the person's injury. The specialist's report must also outline the specialist's medical assessment of the person, and why the specialist prefers their own assessment.

Copies of any and all medical specialist reports for the purpose of confirmation or challenge must be disclosed by the requesting party to the other parties mentioned in regulation 10.

The requirement to be assessed

5. Utilizing s 10, the employer's insurer gave notice in each of the three cases in which reports were to be obtained setting out the request and giving reasons for the request in identical terms. Those reasons were stated to be as follows:

This assessment is to assist Allianz in determining the effects of your injury, what further treatment you may require and your capacity for returning to work. You will need to bring any radiological reports you hold as they will assist with the assessment. Your injury will be assessed and reported on according to (i) aetiology, (ii) diagnosis, (iii) prognosis, (iv) recommended medical treatment, and (v) capacity for pre-injury or alternative duties.

The reasons for the request

6. The request was made by the senior case manager of the employer's insurer, Ms Featherstone. In her affidavit, which was read in the proceedings before the magistrate, Ms Featherstone deposed to her wish to obtain the reports `primarily' to submit them to the insurer's solicitors to enable that firm to advise her about the claim generally and also for use in possible litigation. I consider that her view is not capable of qualifying the reasons for which the notice was given. The view that she expressed could have been properly the subject of objection. Objection was not taken but that fact cannot impugn the reasons given in the notice.

7. The requirement in s 10(5)(a) of the regulations is to state in the notice the reasons for the request. As the Explanatory Statement points out, this is so the reasons for any referral to a specialist are known to all parties. The purpose of the referral is to confirm or challenge a person's medical condition. The notice as given in this case does not permit of a reason or purpose that the report is to be submitted to the insurer's solicitors to enable advice to be given or to be used in possible investigation.

The concession made on behalf of the respondent

8. Notwithstanding, counsel on behalf of the respondent in the proceedings before the magistrate (not being counsel on this appeal), `[did] not contest, on the basis of that affidavit from my friend's insurer, that legal professional privilege arises'.

9. That concession having been made, submissions were then put on the respondent's behalf that any legal professional privilege which arose had been `overridden' or `abrogated' by s 11(4) of the regulations which requires that the person who requested the report to give a copy of the report to the persons who had been given notice of the request.

10. Those submissions were ultimately accepted by the Magistrate but it seems to me on a quite erroneous basis.

The claim of client legal privilege

11. There are three important criteria to be fulfilled if a communication is to attract a claim of client legal privilege. For this purpose I do not distinguish between the requirements of ss 118 and 119 of the Evidence Act 1995 (Cth) in the requirements of those sections as to adducing evidence and the common law position with respect to legal professional privilege (Esso Australia Resources Ltd v The Federal Commissioner of Taxation [1999] HCA 67; (1999) 201 CLR 49). In this case, nothing seems to turn on whether it is the statutory or common law principles that apply.

12. The criteria that require fulfilment are that the communication be confidential, it have the dominant purpose to provide legal advice or legal services for anticipated or pending proceedings, and that the privilege appertaining to that advice or services has not been waived. The circumstances of the report obtained in this matter call into question the first two of those criteria and arguably if the common law position with respect to the privilege is in issue, the third. The simple concession, as was made in this case, does not really assist in the determination of whether each of these criteria have been met.

13. For instance, where the communication is sought on a basis that a copy is to be given to each other person who might have requested it, it is difficult to see how it fulfils the requirement that it be confidential. Section 117 of the Evidence Act 1995 (Cth) defines `confidential document' as:

... a document prepared in such circumstances that, when it was prepared:

(a) the person who prepared it; or

(b) the person for whom it was prepared;

was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law.

In this case, the person requesting the document is under an express obligation in terms of s 11(4) of the regulations to disclose it to all the other persons who may have requested it and the requesting person could well be taken to accept that as the condition for being provided with the report. As far as the dominant purpose is concerned, the purported reasons given in the notice for obtaining the communication in this case do not refer to the seeking of legal advice or the use in litigation. I am unable to see that an unexpressed reason, even if it exists, can be the dominant purpose even if it can be held to be a purpose at all.

The status of the communication

14. It is clear from s 10(2) of the regulations that the report is a report commissioned by the employer's insurer and cannot be commissioned by the insurer's lawyer. The provision of the report by the medical specialist to the employer's insurer was not a communication with the worker's lawyers to obtain legal advice. It only becomes part of the communication between the worker's insurer as a client and the insurer's lawyer if its function is to be an attribute of that communication. As Gaudron J pointed out in Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3; (1997) 188 CLR 501 at 543, legal professional privilege does not protect documents, as such, but protects communications between lawyer and client.

15. In Wheeler v Le Marchant (1881) 17 Ch D 675, Cotton LJ pointed to the distinction between third parties who might be considered to be `representatives' of a client so as to attract the privilege to their communications with the client or lawyer. He said:

It is said that as communications between a client and his legal advisers for the purpose of obtaining legal advice are privileged, therefore any communication between the representatives of the client and the solicitor must be also privileged. That is a fallacious use of the word "representatives." If the representative is a person employed as an agent on the part of the client to obtain the legal advice of the solicitor, of course he stands in exactly the same position is the client as regards protection, and his communications with the solicitor stand in the same position as the communications of his principal with the solicitor. But these persons were not representatives in that sense. They were representatives in this sense, that they were employed on behalf of the clients, the Defendants, to do certain work, but that work was not the communicating with the solicitor to obtain legal advice. So their communications cannot be protected on the ground that they are communications between the client by his representatives and the solicitor.

Strictly applied, the last observation is apt to the present case. The medical specialists in this case were not `employed' by the employer's insurer to do `work' other than for the reasons and purposes expressed in the notice.

16. In Pratt Holdings Ltd v Commissioner of Taxation [2004] FCAFC 122; (2004) 136 FCR 357, the Full Federal Court, Finn, Merkel and Stone JJ, modified that approach by recognising that legal advice privilege is capable of extending to `representative' in the sense of third party non-agent communications if the `representative' who authored the document at the client's instigation was performing the function which would enable the engaging party to make the communication to which the privilege could attach. In such a circumstance, Finn J (with whom Merkel J agreed) made the point that the important consideration was the nature of the function performed by the `representative'. He said (at 367, 368):

The important consideration in my view is not the nature of the third party's legal relationship with the party that engaged it but, rather, the nature of the function it performed for that party. If that function was to enable the principal to make the communication necessary to obtain legal advice it required, I can see no reason for withholding the privilege from the documentary communication authored by the third party. That party has been so implicated in the communication made by the client to its legal adviser as to bring its work product within the rationale of legal advice privilege.

17. In the present case, the medical specialist was giving advice in the context of a request to fulfil the requirements set by the regulations. The function of the report that was being sought by the employer's insurer was described by the reasons given in the notice. In such a circumstance, even if the person requesting the report has in mind giving, or directing the report to be given to a lawyer for advice the function that the report was satisfying was, as the request for the report set out, to assist the respondent's insurer to determine the effects of the plaintiff's injury, the further treatment required and the plaintiff's capacity for returning to work. As such it could not satisfy the dominant purpose test so as to attract a claim for legal professional privilege.

The magistrate's finding as to the occasion of legal professional privilege arising in this case

18. In his reasons for decision, the magistrate concluded:

To my mind, on the facts of this matter, it is more probable than not, that the reports themselves could (sic) be covered by the dominant purpose test, and therefore, would attract legal professional privilege.

That conclusion was predicated only on the concession made by counsel for the respondent and without reference to any of the matters to which I have referred. Those matters demonstrate that the matter should not have been determined upon the concession alone.

Conclusion

19. These considerations lead me to the conclusion that I cannot act upon the concession made by counsel for the respondent and the conclusion that the magistrate drew from it. To do so would really be to decide this matter on a patently artificial and hypothetical basis.

20. I do not discount the circumstance where an insurer, by utilising the notice provisions under the legislation, might attempt to request a person to undergo a medical assessment and give as the reason for doing so the fact that the assessment is required for the purpose of obtaining legal advice or in contemplation of litigation. The validity of such a request will be a matter to be determined should that occasion arise. It is not this case. The question of whether a notice under the regulations could be used for this purpose was not agitated before the magistrate or before me. I consider it to be an open issue at this stage.

21. In all the circumstances, I do not consider that the magistrate's conclusion that the reports were privileged properly considered all the factors that he should have considered notwithstanding the concession made. In the circumstances, I consider that this matter should be remitted to the magistrate to deal with that issue. In that event, I would expect that the respondent would be given leave to withdraw the concession that was made and that the factual issue of the dominant purpose of thecommunication be resolved with each party placing before the magistrate such material as they may be advised.

I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Gray.

Associate:

Date: 10 March 2006

Counsel for the appellant: Mr R L Crowe, SC

Solicitor for the appellant: Sparke Helmore

Counsel for the respondent: Mr G Lunney

Solicitor for the respondent: Pamela Coward & Associates

Date of hearing: 10 November 2005

Date of judgment: 10 March 2006