FEDERAL COURT OF AUSTRALIA

Gheko Holdings Pty Ltd v The Chief Executive Medicare [2013] FCA 164

THE COURT ORDERS THAT:

1.    The amended originating application for judicial review filed 27 February 2013 as further amended on that date be dismissed.

2.    The applicant pay the costs of the first and second respondents as agreed or taxed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

INTRODUCTION

1    These reasons for judgment relate to an application for review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) and orders under s 39B of the Judiciary Act 1903 (Cth) in respect of decisions of the various respondents under provisions of the Human Services (Medicare) Act 1973 (Cth). The first respondent is responsible for managing the scheme known as Medicare in Australia. The second respondent is an officer of the Department of Human Services. The third respondent is a magistrate who issued a search warrant to the second respondent. Medicare is undertaking an investigation into the activities of the applicant, in particular, whether the applicant and others might have contravened the requirements of the Human Services (Medicare) Act in respect of dealings with benefits under Medicare.

2    Five classes of conduct are subject to challenge in this proceeding. The first concerns the decision to carry out the investigation. The second concerns decisions in the course of the carrying out of the investigation. The third concerns the issuing of a search warrant. The fourth concerns the execution of the search warrant. The fifth concerns the appointment of the second respondent as an authorised officer. In order to understand the challenges it is necessary to identify the statutory scheme and some facts.

the statutory scheme

3    The Human Services (Medicare) Act requires there to be a Chief Executive Medicare (s 4(1)). By s 5(1) the Chief Executive Medicare has the functions of managing and implementing the Medicare scheme in Australia. These functions may be delegated to an employee of the relevant Department (s 8AC(1)). Part IID provides for the investigative powers of the Chief Executive Medicare. Sections 8L and 8M are in these terms:

8L

(1)    The Chief Executive Medicare may, by instrument in writing, authorise the powers under this Part to be exercised in connection with an investigation that the Chief Executive Medicare is conducting in the performance of his or functions her.

(2)    Powers under this Part must not be exercised unless they are exercised in connection with an investigation for which such an authorisation is in force.

8M    The Chief Executive Medicare may, by signed instrument, appoint a Departmental employee to be an authorised officer for the purposes of exercising:

(a)    the powers of an authorised officer under this Act; or

(b)    such of those powers as are specified in the instrument.

4    Section 8P provides as follows:

(1)    An authorised officer may require a person to give information or produce a document that is in the person's custody, or under the person's control, to the Chief Executive Medicare if the authorised officer has reasonable grounds for believing that:

(a)    a relevant offence or relevant civil contravention has been or is being committed; and

(b)    the information or document is relevant to the offence or contravention.

(2)    The requirement must be by notice in writing given to the person.

5    By s 8R(1) a person must not refuse or fail to comply with a notice under s 8P on the pain of penalty of imprisonment for six months.

6    A number of provisions of Div 4 of Pt IID of the Human Services (Medicare) Act are also relevant.

7    Section 8X provides that:

(1)    Subject to this Division, if an authorised officer has reasonable grounds for suspecting that there may be on or in any premises evidential material, the authorised officer and an officer assisting may:

(a)    enter the premises; and

(b)    search the premises for the evidential material; and

(c)    if the authorised officer or officer assisting finds the evidential material on or in the premises - seize it.

(2)    The authorised officer or officer assisting must not enter the premises unless:

(a)    the occupier of the premises has consented to the entry; or

(b)    the entry is made under a warrant issued under section 8Y.

8    Section 8Y is the search warrants provision, which is set out below:

(1)    If:

(a)    an information on oath is laid before a magistrate alleging that an authorised officer suspects on reasonable grounds that there may be on or in any premises particular evidential material; and

(b)    the information sets out those grounds;

    the magistrate may issue a search warrant in respect of the premises.

(2)    The magistrate must not issue the warrant unless he or she has been:

(a)    advised what other warrants (if any) have been sought under this Part in respect of those premises in the preceding 5 years; and

(b)    given a copy of the relevant instrument made by the Chief Executive Medicare under subsection 8L(1).

(3)    The warrant must authorise an authorised officer named in the warrant with such assistance, and by such force, as is necessary and reasonable:

(a)    to enter the premises; and

(b)    to search the premises for the evidential material; and

(c)    if the authorised officer finds the evidential material on or in the premises - to seize it.

(4)    The magistrate is not to issue the warrant unless:

(a)    the informant or some other person has given to the magistrate, either orally or by affidavit, such further information (if any) as the magistrate requires concerning the grounds on which the issue of the warrant is being sought; and

(b)    the magistrate is satisfied that there are reasonable grounds for issuing the warrant; and

(c)    the magistrate is satisfied that execution of the warrant will not cause an unreasonable invasion of any patient's privacy.

(5)    There must be stated in the warrant:

(a)    the purpose for which the warrant is issued, and the nature of the relevant offence or relevant civil contravention in relation to which the entry and search are authorised; and

(b)    whether entry is authorised to be made at any time of the day or night or during specified hours of the day or night; and

(c)    a description of the kind of evidential material to be seized; and

(d)    a day, not later than 7 days after the day of issue of the warrant, upon which the warrant ceases to have effect; and

(e)    whether or not the warrant authorises the exercise of powers in relation to records containing clinical details relating to patients.

9    Section 8ZG is also relevant. The relevant parts of s 8ZG are as follows:

(1)    The authorised officer or an officer assisting may operate electronic equipment at the warrant premises to access data (including data not held at the premises) if he or she suspects on reasonable grounds that the data constitutes evidential material.

Note: An authorised officer can obtain an order requiring a person with knowledge of a computer or computer system to provide assistance: see section 8ZGB.

(2)    If the authorised officer or officer assisting suspects on reasonable grounds that any data accessed by operating the electronic equipment constitutes evidential material, he or she may:

(a)    copy any or all of the data accessed by operating the electronic equipment to a disk, tape or other associated device brought to the premises; or

(b)    if the occupier of the premises agrees in writing- copy any or all of the data accessed by operating the electronic equipment to a disk, tape or other associated device at the premises; and take the device from the premises.

…

(4)    If the authorised officer or an officer assisting, after operating the equipment, finds that evidential material is accessible by doing so, he or she may:

(a)    seize the equipment and any disk, tape or other associated device; or

(b)    if the material can, by using facilities at the premises, be put in documentary form--operate the facilities to put the material in that form and seize the documents so produced.

(5)    An authorised officer or an officer assisting may seize equipment under paragraph (4)(a) only if:

(a)    it is not practicable to copy the data as mentioned in subsection (2) or to put the material in documentary form as mentioned in paragraph (4)(b); or

(b)    possession by the occupier of the equipment could constitute an offence.

(3)    grounds that any data accessed by operating the electronic equipment constitutes evidential material, he or she may:

(a)    copy any or all of the data accessed by operating the electronic equipment to a disk, tape or other associated device brought to the premises; or

(b)    if the occupier of the premises agrees in writing - copy any or all of the data accessed by operating the electronic equipment to a disk, tape or other associated device at the premises; and take the device from the premises.

    …

(4)    If the authorised officer or an officer assisting, after operating the equipment, finds that evidential material is accessible by doing so, he or she may:

(a)    seize the equipment and any disk, tape or other associated device; or

(b)    if the material can, by using facilities at the premises, be put in documentary form - operate the facilities to put the material in that form and seize the documents so produced.

(5)    An authorised officer or an officer assisting may seize equipment under paragraph (4)(a) only if:

(a)    it is not practicable to copy the data as mentioned in subsection (2) or to put the material in documentary form as mentioned in paragraph (4)(b); or

(b)    possession by the occupier of the equipment could constitute an offence.

10    It will be apparent that s 8P refers to the concepts of “relevant offence” and “relevant civil contravention”, and ss 8X, 8Y and 8ZG refer to “evidential material”. Definitions are set out in s 3 of the Human Services (Medicate) Act and include the following:

"authorised officer" , in relation to a provision of this Act, means the Chief Executive Medicare or a Departmental employee who is appointed by the Chief Executive Medicare under section 8M to be an authorised officer for the purposes of that provision.

"Chief Executive Medicare" means the Chief Executive Medicare referred to in section 4.

"data" includes:

(a)     information in any form; and

(b)    any program (or part of a program).

"data held in a computer" includes:

(a)    data held in any removable data storage device for the time being held in a computer; or

(b)    data held in a data storage device on a computer network of which the computer forms a part.

"data storage device" means a thing containing, or designed to contain, data for use by a computer.

"relevant civil contravention" has the same meaning as in subsection 124B(1) of the Health Insurance Act 1973 .

"relevant offence" is defined in section 3A.

"seize" includes secure against interference.

"thing" includes a substance.

11    By s 3A a “relevant offence” other than for the purposes of Divs 2 and 3 of Pt IID include an offence against the Health Insurance Act 1973 (Cth).

12    The Health Insurance Act, in Pt IIBA, regulates prohibited practices in relation to pathology services and diagnostic imaging services. The objects of Pt IIBA are set out in s 23DZZIA as follows:

(1)    The objects of this Part are:

(a)    to prevent requesters of pathology services and diagnostic imaging services from (either directly or indirectly) asking for or accepting, or being offered or provided, any benefits (other than permitted benefits) in order to induce the requesters to request the services from providers of those services; and

(b)    to protect requesters of pathology services and diagnostic imaging services from (either directly or indirectly) being threatened in order to induce the requesters to request the services from providers of those services.

(2)    The prohibitions under this Part relating to benefits are not intended to prohibit competition between providers on the basis of the quality or the cost of service they provide.

13    Section 23DZZID contains definitions for the purposes of Pt IIBA. Relevant definitions include the following:

"permitted benefit" has the meaning given by subsection 23DZZIF(1).

"provider" has the meaning given by subsections 23DZZIE(3) and (4).

"requester" has the meaning given by subsections 23DZZIE(1) and (2).

14    Section 23DZZIE defines “requester” and “provider” in ways which include those set out below:

(2)    For the purposes of this Part, a person is a requester of a kind of diagnostic imaging service if the person is one or more of the following:

(a)    a medical practitioner;

…

(c)    if the service is of a kind specified in regulations made for the purposes of subsection 16B(3)--a chiropractor;

…

(g)    in any case:

(i)    a person who employs, or engages under a contract for services, a person specified in paragraphs (a) to (fb); or

(ii)    a person who exercises control or direction over a person specified in paragraphs (a) to (fb) (in his or her capacity as such a person).

(3)    For the purposes of this Part, a person is a provider of a kind of pathology service or diagnostic imaging service if the person is one or more of the following:

(a)    a person who renders that kind of service;

(b)    a person who carries on a business of rendering that kind of service;

(4)    For the purposes of this Part, a person is a provider if the person is a provider of any kind of pathology service or diagnostic imaging service.

15    Section 23DZZIF defines “permitted benefit” in these terms:

(1)    For the purposes of this Part, a benefit asked for or accepted by, or offered or provided to, a person (the beneficiary ) who is, or is connected to, a requester is a permitted benefit if:

(a)    both of the following apply:

(i)    it is covered by subsection (2), (3), (4), (5) or (6);

(ii)    it is not excluded by subsection (7); or

(b)     it is covered by a determination by the Minister under section 23DZZIG.

…

(7)    However, the benefit is not a permitted benefit if:

(a)    the benefit is related to the number, kind or value of requests for pathology services or diagnostic imaging services made by the requester; or

(b)    the benefit consists of the provision of staff or equipment at premises of the beneficiary for the purpose of providing pathology services or diagnostic imaging services, whether the staff or equipment are stationed at the premises full-time or part-time, or visit or are brought to the premises from time to time.

(8)    To avoid doubt, a benefit is related to the number of requests for pathology services or diagnostic imaging services made by a requester if the provision of the benefit is dependent on the requester requesting all, or a proportion of, the requests for one or more kinds of services that the requester makes from a particular provider.

16    Division 2 of Pt IIBA of the Health Insurance Act concerns civil penalty provisions involving requesters, providers and connected persons. Section 23DZZII provides a simplified outline of Div 2 which appears as follows:

17    Section 23DZZIJ provides that for the purposes of Pt IIBA a person is connected to another person in the circumstances described. Sections 23DZZIK-23DZZIM then set out various civil penalty provisions dealing with asking for or accepting, offering or providing or making threats in respect of a benefit that is not a permitted benefit, “not a permitted benefit” being referred to in the headings to these sections excluding the last as “prohibited benefits”.

18    Division 3 of Pt IIBA concerns offences involving requesters, providers and others. Those offences are set out in ss 23DZZIQ – 23DZZIS. Again, these sections relate to a benefit that is not a permitted benefit which the headings of the sections refer to as “asking for or accepting prohibited benefits”, “offering or providing prohibited benefits” and “making threats”.

19    Section 23DZZIR is in the following terms:

Any person offers or provides prohibited benefit

(1)    A person (the first person) commits an offence if:

(a)    the first person offers or provides a benefit to a second person; and

(b)    the first person intends that the benefit will induce a requester of one or more of kinds of pathology services or diagnostic imaging services to request any of those kinds of services from a particular provider and

(c)    the benefit is not a permitted benefit.

Penalty:    Imprisonment for 5 years.

(2)    The requester in paragraph (1)(b) may or may not be the second person. The provider in paragraph (1)(b) may or may not be the first person.

Provider knows that another person offers or provides prohibited benefit.

(3)    A person commits an offence if:

(a)    the person is a provider; and

(b)    a second person offers or provides a benefit to a third person; and

(c)    the second person intends that the benefit will induce a requester f one or more kinds of pathology services or diagnostic imaging services to request any of those kinds of services from the provider; and

(d)    the provider knows (either at the time of the offer or provision of the benefit or at any later time) that:

(i)    the second person offers or provides the benefit to the third person; and

(ii)    The second person has that intention; and

(e)    the benefit is not a permitted benefit.

    Penalty:  Imprisonment for 5 years.

(4)    The requester in paragraph (3)(c) may or may not be the third person.

(5)    Subsection (3) does not apply if:

(a)    within 30 days after the provider first becomes aware as mentioned in paragraph (3)(d), the provider reports the benefit to the Chief Executive Medicare, in the form approved in writing by the Chief Executive Medicare;

or

(b)    that 30 day period has not elapsed.

FACTS

20    The second respondent, Christopher McMillan, was appointed (or, as the applicant would have it, was purported to be appointed) as an authorised officer for the purpose of exercising powers under s 8M of the Health Insurance Commission Act 1973 (Cth) on 7 April 2003 (by para 50 of Sch 4 to the Human Services (Medicare) Act, Mr McMillan’s appointment continued in force and effect).

21    On 2 March 2012 a delegate of the Chief Executive Medicare authorised the exercise of powers under Pt 2D of the Human Services (Medicare) Act. The authorisation is in the following terms:

            HUMAN SERVICES (MEDICARE) ACT 1973

        AUTHORISATION TO EXERCISE POWERS UNDER PART IID

I, David Hancock, a delegate for the Chief Executive Medicare, acting under subsection 8L (1) of the Human Services (Medicare) Act 1973 (‘the Act’), authorise the use of powers under Part IID of the Act to be exercised in connection with an investigation into the alleged activities of Gheko Holdings Pty Ltd T/a Intelligent Chiropractic Supplies and Radiology Reporting Services Australasia Pty Ltd.

Gheko Holdings PtyLtd T/a Intelligent Chiropractic Supplies & Radiology Reporting Services Australasia Pty Ltd are reasonably suspected of being involved in the commission of relevant offences, namely:

•    General and provider offences – offering or providing prohibited benefits –     Section 23DZZIR of the Health Insurance Act 1973

These alleged offences occurring in Queensland between the 1st July 2009 and 31st December 2011 as detailed in the Application for Part IID powers.

The powers are to be exercised in connection with an investigation being conducted in the performance of my functions as delegate for the Chief Executive Medicare.

Dated this 2 day of March 2012.

22    On 16 July 2012 a magistrate within the meaning of the Human Services (Medicare) Act issued a warrant under s 8Y of that Act to Mr McMillan. The warrant is in the following terms:

TO Christopher Roy McMillan, an Authorised Officer for the purpose of Section 8Y of the Human Services (Medicare) Act 1973.

WHEREAS

•    Information on oath has been laid before me this day stating that an authorised officer, for the purpose of section 8Y of Human Services (Medicare) Act 1973, suspects on reasonable grounds that there may be at the premises 15/240 Caroline Springs Boulevard Carole Springs Victoria 3023 covered by this warrant particular evidential material and setting out those grounds; and

•    I have been advised what other warrants (if any) have been sought under Part IID of that Act in respect of those premises 15/240 Caroline Springs Boulevard Caroline Springs Victoria 3023 in the preceding 5 years; and

•    I have been given a copy of the instruments in writing by which the Chief Executive Medicare, acting under subsection 8L(1) of that Act, has authorised a delegate under section 8AC of that Act, namely Mr David Hancock, Delegate for the Chief Executive Officer Medicare Australia to authorise the powers under Part IID of that Act to be exercised in connection with the investigation in relation to which this warrant was sought, being an investigation that Department of Human Services – Medicare is conducting in the performance of its functions; and

•    I have been given, either orally or by affidavit, such further information as I required concerning the grounds on which the issue of this warrant was sought;

AND WHEREAS I am satisfied that:

•    there are reasonable grounds for issuing this warrant; and

•    the execution of this warrant will not cause an unreasonable invasion of any patient’s privacy.

…

(a)    To enter the following premises:

    Intelligent Chiropractic Supplies Pty Ltd

    15/240 Caroline Springs Boulevard

    CAROLINE SPRINGS – VICTORIA 3023.

…

(b)    to search the premises for evidential material which satisfies all of the following three conditions, namely:

    FIRST CONDITION

    Things which are:

a)    Computer systems, programs and data used in the compilation and/or production and/or management of Medicare benefits;

b)    including any electronic device used for storing electronic and/or digital information which contains any of or any reference to the above things;

...

d)    Documents relating to Service Agreements between Gheko Holdings Pty Ltd Trading as (T/a) Intelligent Chiropractic Supplies Pty Ltd and Chiropractic practitioners;

e)    Documents relating to Service Agreements between Gheko Holdings Pty Ltd T/a Intelligent Chiropractic Supplies Pty Ltd and Radiology Reporting Services Australasia Pty Ltd;

f)    Documents relating to Service Agreements between ICS Imaging and Radiology Reporting Services Australasia Pty Ltd;

g)    Financial records/accounts relating to the operation of Gheko Holdings Pty Ltd T/a Intelligent Chiropractic Supplies and Radiology Reporting Services Pty Ltd;

h)    Financial records/accounts relating to the operation of Gheko Holdings Pty Ltd T/a Intelligent Chiropractic Supplies and Radiology Reporting Services Pty Ltd;

i)    Details of all persons employed by Gheko Holdings Pty Ltd Trading as (T/a) Intelligent Chiropractic Supplies Pty Ltd;

…

m)    Emails/written correspondence between Intelligent Chiropractic Supplies Pty Ltd and Chiropractic practitioners;

n)    Emails/written correspondence between Intelligent Chiropractic Supplies Pty Ltd and Radiology Reporting Services Pty Ltd.

SECOND CONDITION

and which relate to any one or more of the following:

…

[names of persons and entities listed]

THIRD CONDITION

Things as to which there are reasonable grounds for suspecting that they will afford evidence as to the commission of the following offence(s), or civil contravention(s), which is a relevant offence or relevant civil contravention within the meaning of Human Services (Medicare) Act 1973;

The allegations are that from the 1st March 2008 chiropractor initiated diagnostic imaging referrals are linked to the payment of non permitted benefits to the chiropractor by Intelligent Chiropractic Supplies (ICS) and it is further alleged that the non permitted benefit is linked to the number, kind and value of the referred services, which is a prohibited benefit as described in Section 23DZZIF (7) (a) and (8) of the Health Insurance Amendment Act 2007.

Medicare provider benefits are then redirected form Radiology Reporting Services Australia (RRSA) to Intelligent Chiropractic Supplies (ICS) to chiropractic entities that have entered into service agreements between themselves and ICS.

Part IIBA Section 23DZZIJ of the Health Insurance Amendment Act 1973 details the circumstances that a referrer/provider or a connected person (in this instance ICS) can breach the prohibited practice legislation. Section 23DZZIR is the offence provision in relation to the offering or providing of prohibited benefits.

Together with any storage medium or storage device which contains any of the above things and any manual, instruction, password or other thing which is needed to gain access to or interpret or decode any of the above things.

c)    to seize any such things as may be found,

23    Mr McMillan executed the warrant at the premises the subject of the warrant on 17 July 2012. He was accompanied by Craig Chapman who is another employee of the Department of Human Services (the relevant Department at the time and presently) in the position of Computer Forensic Examiner and who holds Certificates III and IV – Information Technology.

24    Mr McMillan instructed Mr Chapman to ascertain whether the applicant used an accounting program known as MYOB and emails. According to Mr Chapman he spoke with an employee of the applicant, Erin Vassallo. Mr Chapman said that Ms Vassallo showed him her computer screen. At Mr Chapman’s request Ms Vassallo launched the email system and he saw emails in her inbox and Ms Vassallo said to Mr Chapman “the entire contents of the ICS business email system reside on the email server which is located in my office” and “all the ICS office emails were stored on that system”. Ms Vassallo also showed Mr Chapman an MYOB file “c:\MYOB Data Files\Intelligent Chriopractic Su.myo.”. Ms Vassallo said to Mr Chapman “the MYOB ICS files exist on a MYOB server in the office” and “all of the MYOB files and business email system reside on the two servers”. The two servers were observed by Mr Chapman and Mr McMillan to be two computers in the same office.

25    Mr Chapman called Mr McMillan over to Ms Vassallo’s computer screen. Mr McMillan saw that an email addressed to ICS was open on the screen. Mr Chapman told Mr McMillan that he had looked at the system and found emails and MYOB files, having found the MYOB ICS file. Mr McMillan also saw on Ms Vassallo’s screen an MYOB file which Mr Chapman asked Ms Vassallo to open. Mr McMillan instructed Mr Chapman to “image” (that is, copy) both of the servers. Mr Chapman told Mr McMillan that imaging both servers could take all night and when asked by Mr McMillan for clarification as to how long the exercise would take Mr Chapman said that he did not know. Mr McMillan said that he formed the view that it was not practicable to carry out the imaging of the two servers at the premises and he did not consider there was time to print the material required. Mr McMillan therefore instructed Mr Chapman to remove the servers from the premises and take them to the Department’s laboratory which was done. Ultimately, at the laboratory Mr Chapman copied the entire MYOB data files directory consisting of 423 megabytes of MYOB files and 12.7 gigabytes of exchange email files. According to Mr Chapman, printing this material would have taken a number of days. He agreed it could have been copied onto a USB device, however.

26    Ms Vassallo also gave evidence about her interactions with Mr Chapman and Mr McMillan. The terms of her evidence do not contradict those of Mr Chapman or Mr McMillan. According to Ms Vassallo she was approached by an IT officer (Mr Chapman) who asked her whether she had access to MYOB. Ms Vassallo said she did. The officer asked her how she connected to MYOB. She answered that she connected to MYOB by remote connection, as the data files were on the servers and they were accessed from the computers. The officer asked her to log into her computer and open the MYOB program which she did. The officer asked her to open the Intelligent Chiropractic Supplies’ file which she did. The officer asked her to open a supplier bill from the supplier list which she did and Ms Vassallo went through the procedure of processing the payment of that bill. According to Ms Vassallo neither the IT officer nor Mr McMillan touched her computer or made any attempt to access the contents of the servers. Ms Vassallo said she was not aware of any reason why it would have been impracticable to copy files from the server on to external media at the applicant’s office.

APPLICANT’S CHALLENGES

The search warrant and the investigation

27    There are two essential elements to the applicant’s challenge to the various decisions in issue. The first involves the applicant’s contention that the third condition of the search warrant is unintelligible and/or so infected by various errors that it fails to comply with the requirements of s 8Y of the Human Services (Medicare) Act and, in particular, does not state as required “the nature of the relevant offence or relevant civil contravention in relation to which the entry and search are authorised” (s 8Y(5)). The second is that the third condition is alleged to disclose that the warrant exceeds the authority conferred by the authorisation under s 8L of the Human Services (Medicare) Act.

28    As will become apparent from the following discussion, neither element can be sustained. Accordingly the challenge to the validity of the search warrant must fail and, so too, the various challenges to the validity of the investigation must also fail because they depend on an inference that the investigation as a whole is infected by the same misconceptions and errors said to be apparent on the face of the warrant.

Construction issues

29    The first point the applicant made is that the references to “prohibited benefits” in the second and fourth paragraphs of the third condition of the warrant are meaningless because there is no such thing as a “prohibited benefit” in the statutory scheme. This argument is without substance. For one thing, it overlooks the effect of s 13 of the Acts Interpretation Act 1901 (Cth) which provides:

(1)    All material from and including the first section of an Act to the end of:

(a)    if there are no Schedules to the Act--the last section of the Act; or

(b)    if there are one or more Schedules to the Act--the last Schedule to the Act; is part of the Act.

(2)    The following are also part of an Act:

(a)    the long title of the Act;

(b)    any Preamble to the Act;

(c)    the enacting words for the Act;

(d)    any heading to a Chapter, Part, Division or Subdivision appearing before the first section of the Act.

30    Accordingly, headings to sections in the Health Insurance Act form part of the Act, as do the simplified outlines which commence various provisions of that Act. The simplified outline for Div 2Pt IIBA of the Health Insurance Act states that a benefit is prohibited if it is not a permitted benefit. The headings to ss 23DZZIK, 23DZZIL 23DZZIQ and 23DZZIR all refer to “prohibited benefits” in the context of relevant civil penalty provisions and relevant offences. It is true that in the substance of the sections themselves the reference is to a benefit which is “not a permitted benefit”, but there is no doubt from the simplified outline and from the headings that the statute treats a benefit which is not a permitted benefit as a “prohibited benefit”.

31    For another thing, even without the assistance provided by s 13 of the Acts Interpretation Act, the applicant’s approach is inconsistent with relevant principles.

32    In Different Solutions Pty Ltd v Commissioner, Australian Federal Police (No 2) (2008) 190 A Crim R 265; [2008] FCA 1686 at [98] – [118] Graham J analysed many authorities dealing with the sufficiency of descriptions of offences in search warrants. At [108] Graham J noted that:

Although a warrant must comply strictly with the statutory conditions for its issue (see George v Rockett (1990) 170 CLR 104 at 110–11 and State of New South Wales v Corbett (2007) 230 CLR 606 at [1], [3], [18]–[19], [87] and [95]–[100]), it should, like other documents, be read fairly and not perversely. The language used need not be elegant (see per Burchett in Beneficial Finance at 544 and 546; see also per Hely J in Williams v Keelty at [135]–[139]).

33    To read the references to “prohibited benefits” in the third condition of the warrant in isolation from their context and without any regard to the relevant statutory scheme established by the legislation which is expressly identified in the third condition is both unfair and perverse.

34    The second point the applicant made is that the reference to “Intelligent Chiropractic Supplies (ICS)” is itself meaningless or ambiguous because the warrant otherwise contains references to Intelligent Chiropractic Supplies Pty Ltd, Intelligent Chiropractic Supplies and Radiology Reporting Services Pty Ltd, ICS Imaging and Radiology Reporting Services Australasia Pty Ltd, and Gheko Holdings Pty Ltd trading as Intelligent Chiropractic Supplies and Chiropractic Practitioners. This complaint is also not well founded. The warrant is a warrant to enter the premises of Intelligent Chiropractic Supplies Pty Ltd. The warrant otherwise asserts that Gheko Holdings Pty Ltd trades by Intelligent Chiropractic Supplies Pty Ltd and through the same business name, albeit without the “Pty Ltd”. In context the reference to “Intelligent Chiropractic Supplies (ICS)” is a reference to the company Intelligent Chiropractic Supplies Pty Ltd and the business of Intelligent Chiropractic Supplies. Again it would be perverse to read the third condition any other way in the context of the warrant as a whole.

35    The third point made by the applicant is that the third paragraph of the third condition refers to Medicare provider benefits being “redirected” from Radiology Reporting Services Australia to Intelligent Chiropractic Supplies. The applicant contended that this was meaningless because it is not apparent from the description to where the original Medicare provider benefits were directed. This complaint also involves the perverse reading of the third paragraph. It is apparent that the benefits are being alleged to flow from Radiology Reporting Services Australia to Intelligent Chiropractic Supplies and thence to various chiropractic entities which have entered into service agreements with ICS.

36    The fourth point made by the applicant is that the first sentence of the fourth paragraph of the third condition is meaningless because it asserts that s 23DZZIJ of the Health Insurance Act details circumstances in which a person can breach the “prohibited practice legislation” when in fact the section does no more than define a person who is connected to another person. It is true that s 23DZZIJ merely defines persons who are connected to other persons. But it does so in the context of Div 2 of Pt IIBA of the Health Insurance Act which deals with civil penalty provisions. Those civil penalty provisions include requirements for persons to be connected with other persons. Read in the context of the third condition as a whole, particularly the references to civil contraventions in the first paragraph of the third condition, it is apparent that the first sentence of the fourth paragraph of the third condition is identifying that the scheme involving the flow of Medicare provider benefits from Radiology Reporting Services Australia to Intelligent Chiropractic Supplies and thence to Chiropractic Entities engages the civil penalty provisions.

37    The fifth point the applicant made is that the second sentence of the fourth paragraph of the third condition is also meaningless not only because it refers to “prohibited benefits (an argument rejected) above but also because it moves straight from s 23DZZIJ, which is relevant to civil penalty provisions, to s 23DZZIR which concerns offences. The mere fact that one sentence follows on from another and the two sentences deal with two different topics does not make either sentence meaningless, garbled or confused as the applicant contended. It is also apparent that by the second sentence it is being asserted that the scheme referred to in the third condition also engages the offence provisions contained in s 23DZZIR. Another point the applicant made about this same sentence is that the s 23DZZIR contains two offences. The offence in s 23DZZIR(1) involves a person offering or providing a prohibited benefit whereas the offence in 23DZZIR(3) involves the offence of a provider knowing that another person offers or provides a prohibited benefit. The fact that there are two offences does not support the applicant’s contention that the warrant fails to state the nature of the relevant offence in relation to which the entry and search is authorised. As disclosed in the reasoning in Different Solutions a broad practical approach is taken to the requirement for the nature of the offence to be disclosed in a warrant rather than a narrow pedantic approach. In particular at [103] Graham J noted that:

There is no room for a notion that if separate offences are rolled up in a search warrant, the warrant is in some way invalidated on grounds analogous to duplicity (per Hely J in Williams v Keelty (2001) 111 FCR 175 at [142]).

38    At [111] and [112] Graham J said:

[111] The statement of an offence in a search warrant need not be made with the precision required for an indictment. That would be impossible, and indeed to attempt it would be irrational, bearing in mind the stage of the investigation at which a search warrant may issue. The purpose of the statement of the offence in a search warrant is not to define issues for trial, but to set bounds to the area of search which the execution of the warrant will involve, as part of an investigation into a suspected crime. The appropriate contrast is not with the sort of error which might vitiate an indictment, but with the failure to focus the statutory suspicion and belief upon any particular crime, with the result that a condition of the issue of the warrants is not fulfilled (per Burchett J in Beneficial Finance at 533 which was cited with approval by Heerey J in Chong v Shultz (2000) 112 A Crim R 59 (‘Chong v Shultz’) at [7]).

[112] What the rule requires is identification (and so limitation) of an area of search by reference to a suspected offence, not the formulation of a pleading before the offence is capable of prosecution (per Burchett J in Beneficial Finance at 533–34).

39    Further, as held in Beneficial Finance Corporation v Commissioner of Australian Federal Police (1991) 21 FCR 523 at 525 it is not essential that a warrant refer to a particular offence and authorise seizure by reference to that offence. As Burchett J said at 543, when assessing whether a warrant discloses the nature of the offence:

The matter should be viewed broadly, having regard to the terms of the warrant in the circumstances of each case … The precision required in a given case, in any particular respect, may vary with the nature of the offence, the other circumstances revealed, the particularity achieved in other respects, and what is disclosed by the warrant, read as a whole, and taking account of its recitals.

40    In the present case it is apparent that when the warrant is read as a whole it concerns a complicated scheme involving the applicant and companies and businesses related to the applicant and their arrangements with numerous companies, businesses, medical practitioners and other people asserted to involve asking for, accepting, being offered, or being provided benefits which are not permitted benefits because the benefits are related to the number, kind or value of requests made by requesters. In the context of the warrant as a whole the nature of the potential civil contraventions and offences involved in the scheme are identified.

41    The sixth point which the applicant made is that the third condition refers to a period from 1 March 2008 which is a period of over four years. The applicant contended that this was such a long period that length of time had to be taken into consideration when considering whether the warrant satisfied the requirements of s 8Y(5) of the Human Services (Medicare) Act. It is not apparent why the length of time involved places any greater compliance burden under s 8Y(5) than would otherwise be the case. Nor was any cogent argument put by the applicant to support its proposition that the length of time involved otherwise invalidated the warrant.

42    The final point which the applicant made is that the third condition read as a whole, without the benefit of legal advice, is garbled, confused and meaningless. This submission seems to involve nothing more than wishful thinking on the applicant’s part. Whether the third condition may be described as an example of elegant drafting or not is immaterial. What it is not is meaningless. In the context of the subject matter of the warrant the third condition, read in the context of the warrant as a whole satisfies the requirements of s 8Y of the Human Services (Medicare) Act.

43    For these reasons no inference can be drawn that the magistrate was misled as to the effect of the relevant legislation, nor that Mr McMillan was confused about the operation of the relevant legislation. The assertion by the applicant that the magistrate “must have been completely misled” is simply without foundation. The affidavit put before the magistrate by Mr McMillan does not support the applicant’s case. To the contrary it provides further information in the third condition about the scheme said to provide reasonable grounds for suspecting the Commission of offences.

Authority issues

44    The second essential element of the applicant’s case, as noted, involves the authorisation given by the delegate of the Chief Executive, Medicare under s 8L of the Human Services (Medicare) Act.

45    The authorisation under s 8L refers to alleged offences occurring in Queensland between 1 July 2009 and 31 December 2011. The third condition of the warrant refers to the period from 1 March 2008, the warrant relating to premises in Victoria. According to the applicant this is a simple case of the warrant being beyond the scope of the authorisation in s 8L. The applicant relied on s 8L(2) as a provision requiring that powers under Pt IID of the Human Services (Medicare) Act “must not be exercised unless they are exercised in connection with an investigation for which...an authorisation is in force”. As the only authorisation in force relates to the period between 1 July 2009 and 31 December 2011 for offences in Queensland the warrant, relating to the period from 1 March 2008 served on premises in Victoria, must be invalid. According to the applicant “in connection with” in s 8L(2) means nothing more than “for” and it cannot be said that the warrant is for the authorised investigation.

46    This argument is without merit. Even if the words “in connection with” are construed as meaning “for” (which in my view is far too confined a reading of those words), it is impossible to conclude that the warrant is not “for” the investigation as authorised. The notion that a company in Victoria may not hold data relevant to offences in Queensland is baseless. So too is the notion that data from 1 March 2008 cannot be relevant to offences between 1 July 2009 and 31 December 2011.

The other decisions and related matters

47    As the respondents submitted the sweeping and unfounded nature of the applicant’s is disclosed by the challenge to Mr McMillan’s authority under s 8N of the Human Services (Medicare) Act. Nothing was said in support of that challenge other than Mr McMillan’s authority was somehow infected by the asserted errors in the third condition of the warrant; but given that Mr McMillan’s authority was issued in 2003 when the investigation was not yet contemplated, this challenge is manifestly without foundation.

48    The applicant’s challenges to the investigation as a whole including the issue of notices under s 8P of the Human Services (Medicare) Act are based on the same flimsy, indeed non-existent, foundation. It is said that the alleged errors in the third condition of the warrant somehow infect the investigation as a whole. To the extent that this challenge relied on the challenges to the s 8M appointment and s 8L authorisation, the challenge must fail for the reasons already given. To the extent that the challenge relied on an inference that the investigation as a whole is infected by the errors alleged in the third condition of the warrant, the challenge must also fail for the reasons given. Even if the warrant were invalid on any of the grounds alleged, which it is not, that circumstance would not of itself have any relevance to the validity of the appointment of Mr McMillan as an authorised officer or the authorisation of the investigation. There is certainly nothing in this case which comes close to suggesting that any inference of the supposed infection of the appointment of Mr McMillan as an authorised officer or the authorisation of the investigation should be made.

49    The remaining issue is the execution of the warrant, in particular, the seizure of the two servers.

Execution of the warrant

50    As will become apparent the applicant’s submissions about the execution of the warrant are inconsistent with authority. As explained in Adler v Gardiner (2002) 43 ACSR 24; [2002] FCA 1141 at [41] the applicant has the onus of establishing that the seizure decisions were infected by reviewable error. And as said at [39] of that decision:

The executing officer or constable assisting, has to be satisfied that there are reasonable grounds for suspecting that things seized will afford evidence as to the commission of an offence. The notion of reasonable grounds for a suspicion imports an objective test, but "reasonable" involves a value or normative judgment (Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125 at 167), and there may well be legitimate differences of opinion as to what falls within the term, particularly when it is used in relation to a nebulous expression such as "suspicion". A court is not entitled to substitute its own opinion on that question for the opinion of the executing officer or constable assisting. That does not mean that the executing officer, or constable assisting, has an unexaminable discretion; it does mean, however, that the officer's decision is only impeachable if the decision was one which the officer could not lawfully reach on the materials before him or her: Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 275-276.

51    The applicant contends that the removal of the two servers from the premises was unlawful in that the statutory pre-conditions for this action were not satisfied. According to the applicant there is no evidence as to what was accessed on the screen at the applicant’s premises nor how that material was considered to be relevant to the warrant, the seizure of the two servers plainly being “a case of remove now and inspect later”. As part of this contention the applicant said that the evidence disclosed that the officers had not themselves operated any electronic equipment. They had merely observed the operation of that equipment by an employee of the applicant, which was insufficient.

52    As to the last of these points I do not accept that s 8ZG of the Human Services (Medicare) Act is engaged only if the officer personally operates electronic equipment. Leaving aside the fact that there is a specific power in s 8ZGB for an officer to apply for a magistrate for an order to require a specified person for assistance in respect of accessing, copying and converting electronic data, the terms of s 8ZG do not indicate that the officer only “operates” electronic equipment by personally doing so. In this case the officers directed Ms Vassallo to operate the computer and she did so in accordance with the directions given. This constituted the operation of the electronic equipment by the authorised officer for the purposes of s 8ZG; the applicant has not identified any principled basis for concluding otherwise.

53    As to the balance of the applicant’s contentions, I do not accept the argument that Mr McMillan could not have suspected on reasonable grounds that the data on the two servers constituted evidential material. As the respondents submitted Mr McMillan did not enter the premises with his mind a blank slate. Based on other material available to him Mr McMillan believed that the applicant’s business comprised solely the scheme described in the third condition of the warrant. In circumstances where the operation of the electronic equipment disclosed that the two servers contained Intelligent Chiropractic Supplies’ financial records and emails, Mr McMillan’s suspicion that the servers themselves and the data held on the servers constituted evidential material satisfying the requirements of the warrant was reasonable. Moreover it is apparent from these circumstances that the view Mr McMillan reached that it was not practicable to copy the data or put the material in documentary form was also reasonably open with the consequence that the requirements of ss 8ZG (4) and (5) were satisfied. It is not to the point that the material ultimately copied was more limited than the whole of the material on each of the servers. It was reasonable for Mr McMillan to conclude that there would be a large volume of data on the servers which constituted evidential material and, as Mr McMillan’s evidence which was unchallenged in this regard discloses, Mr McMillan had been told by Mr Chapman that copying the data could take all night and the applicant’s employees made it clear to Mr McMillan that none of the applicant’s employees could stay to supervise those activities. The applicant’s challenge to Mr McMillan’s evidence that, given Mr Chapman’s advice, he formed the view that it was not practicable to copy the data at the premises and did not consider there was time to print the material at the premises did not rise about mere assertion.

54    I also accept the respondents’ argument that, given the terms of the warrant in this case which identifies evidential material as including computer systems as a relevant “thing” and authorises the seizures of any such things, s 8X(1) is also satisfied and provided an independent source of authority for the seizure of the two servers. The applicant did not make any cogent argument to the contrary.

55    In respect of the applicant’s submission that Mr McMillan could not have been satisfied about the second condition of the warrant, an answer may be given. As noted, Mr McMillan believed that the scheme identified in the warrant was the only business conducted by Intelligent Chiropractic Supplies. In these circumstances there is no basis for undermining Mr McMillan’s conclusion that the servers satisfied all conditions of the warrant.

56    To the extent that the applicant contended that the seizure of the two servers was prohibited because the warrants stated that it did not authorise the exercise of powers in relation to records containing clinical details relating to patients, the respondents’ submissions provided a complete answer. The applicant’s case in this regard did not rise above mere assertion. There was no evidence that any of the data on the servers contained records of patients’ clinical details.

Discretionary Issues

57    As the respondents also submitted, there are a number of discretionary considerations which would weigh heavily against the applicant if the applicant’s case had any legal substance. First it is doubtful that the applicant could establish standing to challenge the investigation as a whole. Second, even if the collection of evidence were infected by some illegality that does not necessarily make the evidence inadmissible in subsequent proceedings. Third, the challenge to the investigation as a whole, if successful, would immunise not only the applicant but also other people from investigation of their reasonably suspected contraventions of statutory provisions. Fourth, in circumstances where it is reasonably suspected that the very business scheme which the applicant conducts is unlawful and undermines the integrity of the Medicare scheme, it would be an extraordinary thing for a court to restrain the investigation.

58    As it is, however, the applicant’s case has no legal substance and no proper foundation for any of the relief sought in the application for judicial review has been established.

CONCLUSIONS

59    For these reasons the application for judicial review must be dismissed with costs.

Associate:

Dated:    6 March 2013