Networked Knowledge - Law Reports

This version of the report has been prepared by: Dr Robert N Moles
Underlining where it occurs is for editorial emphasis]

South Australia homepage
Go to: A state of Injustice - table of contents
Go to: Losing Their Grip - The Case of Henry Keogh - table of contents

The Physiotherapy Board Of SA & anor v Heywood-Smith [2008] SASC 253

19 September 2008

Gray and Layton JJ.

This is an appeal against the decision of a District Court Judge, sitting on appeal from the Physiotherapy Board of South Australia. The District Court Judge set aside a finding of unprofessional conduct on the part of Nicholas John Heywood-Smith, made on 28 May 2007 by the Board.

On 13 November 2006, a complaint was laid against Mr Heywood-Smith, the respondent, pursuant to Part 4 of the Physiotherapy Practice Act 2005 (SA). The complaint alleged that Mr Heywood-Smith was guilty of unprofessional conduct upon two grounds, in relation to events alleged to have occurred in 2004 and 2005. The first ground alleged unprofessional conduct by soliciting the payment of a commission on purchases of health equipment made by Mr Heywood-Smith’s patients and clients on his recommendation, from a named supplier. The second ground alleged the receipt of secret commissions from another supplier on purchases of that supplier’s health equipment made by patients and clients on the recommendation of Mr Heywood-Smith. An inquiry was conducted on 15 February 2007 and the Board delivered its decision with reasons on 17 May 2007. It found Mr Heywood-Smith guilty on the first count but not the second. On 28 May 2007 the Board ordered a reprimand and costs of $12,000 against Mr Heywood-Smith.

Part 4 of the Physiotherapy Practice Act addresses unprofessional conduct. Section 40(1) provides:
There is proper cause for disciplinary action against a registered person if—
(a) the person's registration was improperly obtained; or
(b) the person is guilty of unprofessional conduct; or
(c) the person is for any reason no longer a fit and proper person to be registered on the appropriate register.
Section 3 of the Physiotherapy Practice Act defines “unprofessional conduct” to include:
(1) In this Act, unless the contrary intention appears— … “unprofessional conduct” includes—
(a) improper or unethical conduct in relation to professional practice; and
(b) incompetence or negligence in relation to the provision of physiotherapy; and
(c) a contravention of or failure to comply with—  
(i) a provision of this Act; or  
(ii) a code of conduct or professional standard prepared or endorsed by the Board under this Act; and
(d) conduct that constitutes an offence punishable by imprisonment for 1 year or more under some other Act or law.  

This definition operates as an extension of the common law. Although the enactment of the Physiotherapy Practice Act postdates the conduct the subject of the present proceedings, the extended statutory definition of “unprofessional conduct” has retrospective effect. Section 3(2) extends the inclusive definition to unprofessional conduct committed before the commencement of the 2005 Act:
A reference in this Act to unprofessional conduct extends to—
(a) unprofessional conduct committed before the commencement of this Act; and
(b) unprofessional conduct committed within or outside South Australia or the Commonwealth.

Doyle CJ in Keogh v Medical Board of South Australia [1] when addressing a comparable provision in the Medical Practitioners Act 1983 (SA), observed: The statutory definition of unprofessional conduct is an inclusive one. I have no doubt that unprofessional conduct will include conduct that falls within the test articulated in In re R (A Practitioner). In this way, personal conduct unrelated to medical practice will be caught. That was the point made by Duggan J in Reyes v Dental Board of South Australia (2002) 83 SASR 551; [2002] SASC 239 at [25]- [33].

But the terms of the Act make it clear that unprofessional conduct for the purposes of the Act includes conduct that amounts to “incompetence” or to “negligence”. The meaning given to the undefined expression “unprofessional conduct” by this Court in In re R (A Practitioner) cannot be used to control the statutory meaning of unprofessional conduct, or to override that meaning, at least in a case that is concerned with an allegation of incompetence or negligence, as distinct from a complaint that raises “improper or unethical conduct”: cf Coote v Medical Board of South Australia [1999] SASC 394; (1999) 204 LSJS 459 at 473-474 Duggan J.

Throughout these proceedings, the Board has relied on the common law to make out its case, without seeking to utilise the statutory definition of “unprofessional conduct”. Mr Heywood-Smith raised no objection. This approach was likely to have favoured Mr Heywood-Smith, in that the common law test appears in some circumstances to provide a more stringent test by requiring the Board to be satisfied that the alleged conduct fell short of the applicable standard “to a substantial degree”. However, this may not necessarily be the case when the unprofessional conduct amounts to a contravention of the Act. It is unnecessary in these proceedings to discuss further the difficult questions which could potentially arise on the implications of the intersection of the common law and statutory provisions.

 The Physiotherapy Practice Act in Division 3 makes provision for proceedings before the Board. Relevant to these proceedings is section 45, which deals with inquiry to be made by the Board in relation to allegations of unprofessional conduct. Section 45 relevantly provides:
(1) A complaint setting out matters that are alleged to constitute grounds for disciplinary action against a person may be laid before the Board (in a manner and form approved by the Board) by—
(a) the Registrar; or  
(b) the Minister; or  
(c) a representative body; or  
(d) a person who is aggrieved by the conduct of the person or, if the person aggrieved is a child or is suffering from a mental or physical incapacity, by a person acting on his or her behalf.
(2) If a complaint is laid under this section, the Board must inquire into the subject matter of the complaint unless the Board considers that the complaint is frivolous or vexatious. ...
(4) If, after conducting an inquiry under this section, the Board is satisfied on the balance of probabilities that there is proper cause for disciplinary action against the respondent, the Board may, by order, do 1 or more of the following:  
(a) censure the respondent;  
(b) require the respondent to pay to the Board a fine not exceeding $10 000;  
(c) if the respondent is a registered person—  
(i) impose conditions on the respondent's registration restricting the respondent's right to provide physiotherapy;  
(ii) suspend the respondent's registration for a period not exceeding 1 year;  
(iii) cancel the respondent's registration;  
(iv) disqualify the respondent from being registered;  
(d) prohibit the respondent from carrying on business as a physiotherapy services provider;  
(e) prohibit the respondent from occupying a position of authority in a corporate or trustee physiotherapy services provider.  
(5) The Board may—  
(a) stipulate that a disqualification or prohibition under subsection (4) is to apply—
(i) permanently; or  
(ii) for a specified period; or  
(iii) until the fulfilment of specified conditions; or  
(iv) until further order;  
(b) stipulate that an order relating to a person is to have effect at a specified future time and impose conditions as to the conduct of the person or the person's business until that time.

Mr Heywood-Smith was registered as a physiotherapist on 25 January 1999. He then worked both overseas and in South Australia. During this time he became aware of an equipment supplier, Home Health Equipment. In early 2004, Mr Heywood-Smith commenced physiotherapy practice under the name Wellness and Lifestyles Australia, in partnership with his wife. Initially the business was conducted by Mr Heywood-Smith, contracting his work as a physiotherapist to aged care facilities, while his wife worked from their home. The business has, over time, grown substantially. At the time of the hearing before the Board, the partnership business serviced over 70 aged care facilities in South Australia, and more than 3000 aged care beds. The aged care facilities included community and district hospitals, day therapy centres, as well as centres for the intellectually disabled. The business employed physiotherapists, podiatrists, speech pathologists, dieticians, aroma therapists, naturopaths, and masseurs. The business had some 50 physiotherapists on its books. In late 2004, the business was still in an early growth phase, servicing some 10 sites with four to five physiotherapists on its books. Mr Heywood-Smith, in late 2004, continued to work for the business as a physiotherapist, and was still practising at the time of the events the subject of the complaint.

On 20 October 2004 at the Churchill Nursing Home at Prospect, a salesman engaged by Design Innovations SA demonstrated a product known as a Club Chair to Mr Heywood-Smith and to other employees of the nursing home. This demonstration had been arranged by the director of nursing. The product was a manually operated chair commonly found in nursing homes. At the time, Mr Heywood-Smith was engaged to work a shift at the nursing home as a physiotherapist. After the demonstration, Mr Heywood-Smith spoke to the salesman. There were two follow-up telephone calls. On 9 November 2004, Mr Heywood-Smith sent Design Innovations an e-mail. The e-mail relevantly stated: W& L’s primary business is to service Aged Care Facilities with the best allied health care. From this we recommend equipment to benefit the resident’s health and safety. This has lead [sic] us to develop close relations with professional equipment providers whom also strive to provide clients with the same professional service. After meeting you at Churchill Court and seeing your product I was interested in potentially developing a relationship with you and A1 Scooters.
We feel it is very important for whom ever we work to have the same high standards. We will consider all products and complimentary services to allied health on an individual basis if it benefits our clientele. These products and services must be quality and price competitive for us to recommend them. Under no circumstances would we ever stop a client from purchasing another business product if it is more suited to their needs. Our main objective at all times is to provide the best quality allied health service.
If our therapists are to recommend your products and take the time to research the best option for their client we feel it is in your best interest to offer a small financial incentive for their time and effort as you would a sales rep!
If you are interested in developing a relationship and educating us on your products we would be interested in meeting with you and your company to discuss the benefits of your products and whether we feel they are suitable for us to recommend. If you would like to discuss this further please do not hesitate to call myself or Nikki on the numbers below.

Design Innovations’ manager, Rodney Paul Meuris, telephoned Mr Heywood-Smith about the e‑mail. Mr Meuris was professionally affronted by the suggestion that Design Innovations provide a financial incentive to physiotherapists for recommending products and lodged a complaint with the Registrar of the Board. Mr Meuris gave evidence that he had dealt with nursing home physiotherapists and occupational therapists but that he had never been asked to provide them with a financial incentive to learn about his products. Ruth Aylward Brunt gave expert evidence concerning the role and expectations of physiotherapists in an aged care facility and the ordinary procedures for the purchase of equipment within a facility. Ms Brunt’s report and evidence were received without objection. Ms Brunt had extensive experience in private and public practice and was a senior member of the Australian Physiotherapy Association. Ms Brunt’s evidence was to the effect that Mr Heywood-Smith’s conduct in soliciting a commission on the sales of Design Innovations’ products and in not disclosing commissions he received from another supplier did not accord with the standard of professional conduct observed by physiotherapists.

Ms Brunt’s evidence was that the primary role of a physiotherapist in a residential facility was to establish a care plan for residents which, in almost all cases, involved recommending some form of equipment. In her opinion “it was very much a fundamental part of working in an aged care facility” to have a knowledge of the available equipment for the purposes of making recommendations. Her view was that an assessment of the most appropriate equipment was part of the work for which physiotherapists, engaged by a residential facility, were paid. In Ms Brunt’s opinion the payment of a commission “can influence your decision about which product you select for a client”. Ms Brunt considered it inappropriate for a physiotherapist to obtain an undisclosed commission because: If the person that is buying the product doesn’t know that the person in the middle is making money from that sale and also if the person that’s doing that is influenced about what equipment they’re prescribing for the person on the fact that they’re going to make that money.

Mr Heywood-Smith had admitted both before and during the giving of his evidence, that he had an arrangement with Home Health Equipment whereby he was paid a commission on purchases made by his patients, of products supplied by Home Health Equipment. He wished to put in place the same arrangement with Design Innovations. The arrangement was terminated after Mr Meuris complained to the Board. Gregory John Rowan, a witness called by Mr Heywood-Smith, was the principal of the business Home Health Equipment. Mr Rowan’s evidence was that he had a rebate arrangement with certain domiciliary care organisations, a group of physiotherapists in Port Augusta, and with some chemist shops. However, with respect to the domiciliary care organisations, it appeared that they had an “on-sell” arrangement as they would “buy in bulk and sell to their clients” rather than receive a commission on a sale directly from Home Health Equipment to the patient.

Mr Rowan described the arrangement with Mr Heywood-Smith’s business as one where Mr Heywood-Smith would: Get a rebate on product being sold from our company and that was a standard sort of agreement on different bits and pieces. There was no standard pricing or anything like that. It was purely a rebate on product that went through from Wellness and Lifestyle. The percentage paid was between 1% and 5%.

The evidence led from Mr Rowan about aspects of these commercial arrangements was vague. Mr Rowan did not expressly say that he had an arrangement with any other physiotherapist or occupational therapist that was the same as the one he had with Mr Heywood-Smith. Indeed he said that:  “the commercial arrangements were very different between different organisations”. Mr Rowan accepted that providing a rebate or commission was used by him to attract custom and that it was “a marketing sweetener”. Mr Heywood-Smith also gave evidence. He said that he would not have refused to recommend equipment on the basis that he could not potentially receive a financial incentive. He agreed that he never told any of the residential facilities in which he worked that he received financial gain from any purchases of products supplied by Home Health Equipment. He said that he told the residential facilities that he had a “relationship” with that firm and he could get products at a cheaper price. Mr Heywood-Smith accepted Ms Brunt’s evidence about the role of a physiotherapist engaged to perform work in residential facilities. He said that it was not a daunting task to keep himself apprised of the equipment on the market. He confirmed that neither he nor his business ever bought any equipment from Home Health Equipment. The Board concluded that the writing and transmitting of the e-mail of 9 November 2004 from Mr Heywood-Smith to Mr Meuris was unprofessional conduct, in that Mr Heywood-Smith sought a reward for recommending particular products. The Board then concluded that there was proper cause for disciplinary action against Mr Heywood-Smith for unprofessional conduct and that the disciplinary action should take the form of a reprimand, in writing, from the Board.

Appeal to the District Court

The appeal to the District Court was governed by section 51 of the Physiotherapy Practice Act, which provides: 
(1) An appeal lies to the District Court against—
(a) a refusal by the Board to register, or reinstate the registration of, a person under this Act; or  
(b) the imposition by the Board of conditions on a person's registration under this Act; or
(c) a decision made by the Board in proceedings under Part 4.  
(2) An appeal under subsection (1)(c) against a decision may be instituted by the complainant or the respondent in the proceedings in which the decision was made.
(3) An appeal must be instituted within 1 month of the date of the decision appealed against.

The appeal to the District Court was also governed by Division 2 of the District Court Act 1991 (SA). Relevantly, section 42E provides:
(1) The Court must, on an appeal, examine the decision of the original decision-maker on the evidence or material before the original decision-maker but the Court may, as it thinks fit, allow further evidence or material to be presented to it.
(2) The Court, on an appeal—  
(a) is not bound by the rules of evidence but may inform itself as it thinks fit; and  
(b) must act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms.
(3) The Court must, on an appeal, give due weight to the decision being appealed against and the reasons for it and not depart from the decision except for cogent reasons.

Section 42F provides:
The Court may, on an appeal—
(a) affirm the decision appealed against;  
(b) rescind the decision and substitute a decision that the Court considers appropriate;  
(c) remit matters to the original decision-maker for consideration or further consideration in accordance with any directions or recommendations of the Court.

The District Court Judge, in allowing the appeal, considered that the Board had failed to apply the correct test in determining whether Mr Heywood-Smith had engaged in unprofessional conduct. In that respect the Judge took the view that the Board had failed to consider whether the conduct was inconsistent with appropriate professional conduct to a substantial degree. It was said that this failure represented a departure from the appropriate test, and that the decision of the Board was permeated by error. The Judge further found that the Board had regard to irrelevant material. This was a reference to the evidence received from Ms Brunt, which included opinion evidence as to whether the conduct alleged against Mr Heywood-Smith, if proven, could amount to unprofessional conduct. The Judge took the view that this evidence was irrelevant and inadmissible, and that it was not appropriate for the Board to have received the evidence on what was its own task. The Judge in this respect observed: [2] The Board revealed that it had taken into consideration the evidence of Ms Brunt including “as a member of the physiotherapy profession of good repute and competency”. It was not appropriate for the Board to receive evidence on what, with respect, was its task. The Board is established as a specialist professional board, charged with determining whether conduct was unprofessional. It is not appropriate that it abrogate its task to any other member of the physiotherapy profession or seek the views of members of the profession. It is for the Board to apply its own knowledge. In fairness to the witness Ms Brunt, she should not have been asked for her “expert opinion” in relation to the conduct of the appellant, and whether such conduct could amount to unprofessional conduct. In having regard to Ms Brunt’s opinion as to the meaning of the e-mail, the Board was in error. However, it would have been permissible for a witness to explain the factual context to assist the Board to reach a conclusion. I mean by this that it may have been appropriate for the Board to receive evidence of the role generally of a physiotherapist concerning the recommendation and ordering of health products for clients of the physiotherapist, and for residents or patients of a facility to which the physiotherapist is contracted, as appropriate. Whether such evidence is appropriate will depend on the facts of the case. In having regard to Ms Brunt’s opinion evidence as to whether the conduct as alleged would constitute professional conduct, if proved, the Board was in error.

The Judge was also critical of the Board’s reference to the Australian Physiotherapy Association Code of Conduct. In this respect her Honour reasoned: [3] Clause 10 of the Australian Physiotherapy Association (APA) Code of Conduct provides that “APA members shall act in a manner which reflects well on the physiotherapy profession”. The Board said that it: “considers clause 10 of the APA Code of Conduct as being indicative of what may be deemed ‘unprofessional conduct’.” (paragraph [56.4]). In paragraph [56] the Board appears to have drawn upon the Interpretation of the Code of Conduct established to provide “practical interpretations to assist APA members to understand and uphold the Code”.

The APA Code is expressed to be established by the APA “as the basis for ethical and professional conduct which meets community expectations and justifies community trust in the judgment and integrity of APA members”. It did not bind the appellant at the relevant time, as he was not a member of the Australian Physiotherapy Association. I accept that the clause could conceivably be useful to inform a tribunal that was not constituted to include a physiotherapist, as to improper or unethical conduct and perhaps, unprofessional conduct, in the absence of legislative definition or other test. However, the Board was charged with deciding whether the conduct was unprofessional. It decided to apply the test derived from the relevant passage in In Re, A Practitioner (above). It was incumbent on the Board to decide whether the conduct was unprofessional and in terms of the test derived from the relevant passage; not to cast around for another standard by which to assess the conduct. Insofar as the Board had regard to clause 10 of the APA code as being indicative of what could amount to “unprofessional conduct”, it was in error.

Finally, the Judge concluded that the Board’s conclusions as to the meaning of the e-mail were incorrect. The Judge considered that on its proper construction, the e-mail did not disclose that Mr Heywood-Smith was seeking a reward for recommending particular products. In this respect, her Honour’s reasons concluded: [4] The evidence from the appellant revealed that what was intended by the contents and transmission of the e-mail was not precisely that conveyed by the words. However, the Board was entitled to look itself at the plain, objective meaning of the words, in their context. The words quoted in the charge, standing alone, may have entitled the Board to conclude that the appellant was seeking a small financial reward for the therapists with whom he had an association, for recommending a particular product or products, although that is not precisely what the Board concluded. The full e-mail as transmitted, gives rise to a different picture. It reveals that the therapists would recommend a particular product only if it benefited the client, was quality and price competitive, and suited the client’s needs. In addition the e-mail stated that the therapist would have to be satisfied in each case that it was appropriate to recommend the product in respect of which he or she would receive a small benefit, if ordered. The words of the charge should have been read in the context of the whole of the e-mail, including, “our main objective at all times is to provide the best quality allied health service”. The evidence does not support the Board’s finding that the appellant sought a reward for recommending particular products.

Appeal to this Court

Section 43 of the District Court Act provides for an appeal to this Court from the decision of the District Court Judge. There was some debate on this appeal as to the nature of this Court’s jurisdiction. In our view the appeal is an appeal by way of re-hearing, and in the event that this Court concludes that there was a material error of law, mixed law and fact, or fact by a District Court Judge, this Court should review the proceedings before the Board and is empowered to exercise all of the powers of the District Court. The Solicitor-General, appearing for the Board, submitted that the Board had applied the correct test in making its finding of unprofessional conduct and that the Judge had wrongly found the Board to be in error. The Judge had concluded that the Board was in error in formulating the relevant test: [5] [A]s it did in paragraphs [3] and [10] of its reasons because it omitted from the question, the element of degree or seriousness contained in the words “to a substantial degree” in the relevant passage.

Counsel for Mr Heywood-Smith submitted that no error of the Judge was disclosed and that the Judge was correct. It was argued that the errors identified by the Judge were correctly borne out by a close reading of the Board’s reasons. It was submitted that the Board had not identified whether or to what extent the conduct fell short of the appropriate professional standard. It was further argued that the Board was only guided by the views of the Full Court in In re R, A Practitioner [6] and did not expressly state that it applied those views. It was further submitted that the different wording in paragraphs two and three of the Board’s orders could be linked to the different wording in the complaint. The complaint in count 1 asserted that the conduct was “unprofessional”, whereas count 2 alleged that the conduct was “unprofessional in that the conduct fell short to a substantial degree from proper conduct”.

The Solicitor-General, in support of his submissions, relevantly drew attention to the following reasoning of the Board:
Unprofessional Conduct
[6] The question under Inquiry is whether, on the evidence, the respondent was unprofessional within the meaning of section 40 of the Physiotherapy Practice Act 2005 (“the Act”).
[7] Although the alleged complaints occurred prior to the commencement of the Act, the following is contained within the Act:
“Part 1 – Preliminary
3 Interpretation …
(2) A reference in this Act to unprofessional conduct extends to –  
(a) unprofessional conduct committed before the commencement of this Act …”
[8] The meaning of ‘unprofessional conduct’ within the Act is not exclusive and hence the Board is guided by the views of the Full Court of the Supreme Court of South Australia In Re R. A Practitioner of the Supreme Court (1927) SASR 58 at 60 that states: “In our view ‘unprofessional conduct’ is not necessarily limited to conduct which is ‘disgraceful or dishonourable’, in the ordinary sense of those terms. It includes, we think, conduct which may be reasonably held to violate or to fall short of, to a substantial degree, the standard of professional conduct observed [or] approved of by members of the profession of good repute and competency.”
[9] This test was applied in Re: Ward [1953] SASR [308] (Full Court), a case involving a physiotherapist. More recently, Re Ward was cited with approval in … Versteegh v The Nurses Board of South Australia [(1992) 60 SASR 128].
[10] The question of whether a physiotherapist and therefore the respondent has committed unprofessional conduct is a question of whether “members of the profession of good repute and competency” (Re: Ward) regard the physiotherapist’s acts to be within the bounds of the profession. The Board is constituted to include members of the profession of good repute and competency.

It was submitted that the Judge had apparently overlooked the reasoning set out above, in particular in paragraph eight. In our view, the Board had correctly set out the extract containing the test from the Supreme Court decision of In Re R, A Practitioner of the Supreme Court. [7] The significance of paragraph eight of the reasoning of the Board is that it contains expressly the phrase “fall short of, to a substantial degree”. This was a clear demonstration that the Board was fully aware of the applicable test and the need to evaluate the degree or seriousness of the conduct, and the extent to which it may fall short of proper professional conduct. The reference in paragraph ten to “the bounds of the profession” is an expression taken in the decision In Re Ward, [8] referred to in paragraph nine, which conveys the same concept. In addition, comparison of paragraphs two and three of the orders of the Board demonstrate that the Board dismissed the second count because it found that the proven conduct with respect to that count did not fall short of accepted practice to a sufficient degree: 
2. The Board found that on the first count the respondent’s conduct was unprofessional and that there was proper cause for disciplinary action against him.
3. The Board found that on the second count the respondent’s conduct did not fall short of accepted practice to a sufficient degree for it to be deemed unprofessional.
There is no basis to conclude that the Board applied the wrong test on the first count and the correct test on the second count.

Turning next to the Judge’s criticism of the Board’s acceptance of the evidence of Ms Brunt, it should be said immediately that Ms Brunt was an appropriately qualified physiotherapist with particular experience in regard to aged care services, and was in a position to provide relevant expert evidence as to the practices followed by physiotherapists in that area. Section 20 of the Physiotherapy Practice Act, dealing with the Board’s procedures, provides:
(1) In proceedings before the Board under this Act, the Board—  
(a) is not bound by the rules of evidence and may inform itself on any matter as it thinks fit; and  
(b) must act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms.  
(2) In proceedings before the Board under this Act, the Board must keep the parties to the proceedings properly informed as to the progress and outcome of the proceedings.

The Board was entitled to inform itself as it thought fit. It did so through Ms Brunt’s evidence. It is relevant to observe that no objection was taken to the receipt of the evidence. The Judge made no reference to the terms of section 20(1)(a), or to the fact that there was no objection to the evidence. We also note that in Murphy, [9] Mason CJ and Toohey J observed: It is unnecessary to spend time on the question whether an expert may give an opinion on the very issue of fact or law which the court has to determine. It is doubtful that there is now an absolute rule precluding an expert witness from expressing a view as to the ultimate issue: see Cross on Evidence, 3rd Aust. ed. (1986), p717. There are a number of observations of intermediate court judges to similar effect.

While it would be inappropriate for the Board to allow its function to be usurped by an expert, it is well settled that it is undesirable to allow experts to become involved in the judicial decision-making process. The danger is that a judicial function will be usurped by an expert answering questions that only a court or tribunal can decide. However, in the present case a review of the reasons of the Board does not provide any indication or support for a submission that the Board allowed its functions in some way to be usurped by Ms Brunt. In relation to the appropriate professional standard to be applied, the APA Code of Conduct was tendered by Mr Heywood-Smith as part of the defence case. The Board’s reference to the APA Code of Conduct was not inappropriate. It was relevant material from which the Board could inform itself about the terms of the Code of Conduct and provided information with respect to professional standards there identified. The Code of Conduct was a matter to which the Board was entitled to have regard in considering what norms were accepted by physiotherapy practitioners of good repute. As earlier observed, the Board was entitled to inform itself as it saw fit. The conclusions of the Judge with respect to this matter were, in our view, not well-founded, and led the Judge to unfairly criticise the reasoning of the Board.

The above observations and conclusions disclose that the Judge erred in her analysis of the Board’s reasons in such a way that it is necessary for this Court to review the evidence and material before the Board, and the Board’s reasons, in considering the issues arising on the appeal. Before coming to discuss the terms of the e-mail, it is necessary to discuss some matters of context and background. Mr Heywood-Smith had already entered into an arrangement with Home Health Equipment, which included the payment of a commission. As discussed above, the evidence established that there had been no disclosure of the receipt of this financial benefit, but simply a disclosure that there was a relationship and arrangement with a certain organisation. This, in our view, is not relevant disclosure.

The evidence of Mr Heywood-Smith was that he was endeavouring to achieve with Design Innovations the same arrangement that he had with Home Health Equipment. A consideration of the whole of the e-mail reveals a number of matters of concern:
There is a blurring between the business of Wellness and Lifestyles, and the collective of the physiotherapists employed by Wellness and Lifestyles, which included Mr Heywood-Smith. The email refers to “our” clientele, “our” therapists and suitable for “us” to recommend.
 There is a veiled inference from the words “If our therapists are to recommend your products … we feel it is in your best interests to offer a small financial incentive”, which suggests that, if Design Innovations is not prepared to offer a financial incentive, his therapists may not be willing to recommend the product.
The reference to offering a small financial incentive, as you would to a “sales rep”, is significant. A sales representative, of course, promotes a product. This would suggest that it was not going to be merely a matter of obtaining a commission if equipment was recommended and a sale was made, but that the financial incentive would encourage the physiotherapists to promote the products of Design Innovations.
 The reference to the “financial incentive” as representing a payment for the time and effort given to assessing and recommending equipment to benefit a patient is unconvincing. This was to be a commission to be paid every time equipment was recommended and a sale made. An inspection and analysis of the product could not be required each time. It is true that each patient has special needs, but once the equipment was understood, which would involve a once only assessment, it was simply using and applying that knowledge.
 Ms Brunt’s evidence was that assessment of equipment was required as part of the job. In other words, when a physiotherapist was required or asked to recommend some item to assist a patient, particularly in an aged care environment, it would be expected that the physiotherapist must have this product knowledge. This would mean that any additional commission payment was in effect a double payment for that which should have been part of their job in the first place.

The essence of the professional standard of which Mr Heywood-Smith fell short was the standard of a professional avoiding an actual or potential conflict of interest. This is the relevant characterisation of the consequence of undisclosed or secret commissions. There is a conflict of interest in relation to the patient in circumstances where a product may be the subject of recommendation by the physiotherapist and the physiotherapist may be influenced by the incentive of an additional commission payment.

Secret commissions; that is the taking of commission by a physiotherapist for the sale of products which are recommended to patients, without disclosing the financial benefit received by the physiotherapist, amounts, in our view, to unprofessional conduct. Counsel for Mr Heywood-Smith drew attention to the dismissal of the second count, and submitted that the conduct the subject of the second count was in substance the proposed conduct the subject of count one. In consequence it was submitted that the Board should have followed through with the reasoning that led to the dismissal of the second count and dismissed the first count. He emphasised that there was no appeal for the dismissal of the second count. When it was pointed out to counsel that this submission put in issue the correctness of the Board’s reasoning and ruling on the second count, counsel suggested that this Court should not embark upon a review of that reasoning. We disagree. It is our view that the circumstances giving rise to the second count do in fact disclose unprofessional conduct on the part of Mr Heywood-Smith. In the course of his engagement as a physiotherapist, he advised patients and clients to purchase equipment from a supplier without disclosing to those patients or clients that he was to be paid a commission. In our view, such conduct was unprofessional and fell well below the standard of professional conduct expected of a physiotherapist.

As earlier observed, there is no appeal from the dismissal of the second count. However, we reject the submission that we are bound to assume the correctness of the Board’s reasons on the second count and apply that reasoning to the first count. In any event, there is a significant difference between the facts of the two counts. On the second count, Mr Heywood-Smith simply accepted what was an existing practice, already established by the supplier. The circumstances of the first count involve Mr Heywood-Smith positively soliciting a comparable arrangement with a different supplier. This supplier considered Mr Heywood-Smith’s proposal to be completely inappropriate, and referred the matter to the Board.

The final issue related to costs. The District Court Judge ordered the Board to pay Mr Heywood-Smith’s costs, being the fees of his counsel. It was said that counsel appeared without an instructing solicitor being engaged. It was said that, in this circumstance, no basis for indemnity had been made out. It was contended that no obligation had been established on Mr Heywood-Smith to pay the fees of counsel. It was suggested that the independent bar rules required counsel to be engaged by an instructing solicitor, and in the absence of such arrangement, counsel was precluded from recovering any fees.

Although it is unnecessary to make an order in respect of this issue because of our decision to allow the appeal and reinstate the Board’s order, it is appropriate that we express our views on this issue. In Trevorrow v State of South Australia (No 7), [10] Gray J reviewed relevant authority – Cachia v Hanes, [11] Harold v Smith, [12] Angas Pty Ltd v Ilich Motor Company Pty Ltd, [13]  Johnson Tiles P/L & Anor v Esso Aust P/L & Ors (No. 2), [14] O’Keeffe v Hayes Knight GTO Pty Ltd, [15] and Wentworth v Rogers [16] – and then summarised the following principles: [17]
- the indemnity principle is the guiding principle concerning the recovery of costs;
- the indemnity principle allows for an indemnity if there is a liability of the claimant to his or her solicitor;
- in the absence of any express agreement, the retainer of a professional person to act will normally give rise to an implied agreement for the payment of reasonable professional fees and disbursements;
- the onus is on the party seeking to avoid an order to establish that there is no liability on the part of the claimant to his or her solicitor for costs;
- the fact that the solicitor is employed by a Crown law office or some other agency or institution or corporate employer does not preclude the making of a costs order; and
- the indemnity principle is a flexible principle, designed to allow for a just and fair result.

In the present circumstances, there was no attempt by counsel to explore the facts surrounding counsel’s engagement. It is difficult to understand how, as between counsel and Mr Heywood-Smith, there could not be a claim for work done, at least on a quantum meruit basis. To adopt the test from the authorities, the Board has not established that under no circumstance was Mr Heywood-Smith liable for costs. Accordingly, we reject the submissions of the Solicitor-General. This appeal should be allowed. The orders of the District Court should be set aside and the orders of the Board reinstated.

Kelly J: I agree with the orders proposed by Gray and Layton JJ and with the reasons they have given.

Footnotes

[1] Keogh v Medical Board of South Australia (2007) 99 SASR 327 at [63]-[64].

[2] Heywood-Smith v Physiotherapy Board of SA [2008] SADC 18 at [62]-[65] (footnotes omitted).

[3] Heywood-Smith v Physiotherapy Board of SA [2008] SADC 18 at [70]-[72].

[4] Heywood-Smith v Physiotherapy Board of SA [2008] SADC 18 at [51]-[52].

[5] Heywood-Smith v Physiotherapy Board of SA [2008] SADC 18 at [44].

[6] In re R, A Practitioner [1927] SASR 58.

[7] In Re R, A Practitioner of the Supreme Court [1927] SASR 58 at 60.

[8] In Re Ward [1953] SASR 308.

[9] Murphy v The Queen (1989) 167 CLR 94 at 110.

[10] Trevorrow v State of South Australia (No 7) [2008] SASC 5.