Comcover Legal Service Provider
Forum Series
Legal Services Directions and Model Litigant
Obligation
26 November 2013
Marianne Peterswald, Australian Government Solicitor
and
Catherine Fitch, Assistant Secretary, Office of Legal Services
Coordination
Outline of presentation
1. Legal Services Directions – source and basics
2. Key points about Model Litigant Obligation (MLO)
3. Practical points
4. Compliance
5. Obligation in practice ─ some scenarios
6. Appendix E
7. Future revisions of the LSDs – timing and themes
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Legal Services Directions/MLO
Source and Basics
— Judiciary Act 1903
— general directions and those ‘in relation to a particular
matter’
— definition of Commonwealth legal work
— non-compliance only enforceable by Attorney-General
— why is compliance important?
— common law
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Key points
Claims and litigation by or against the Commonwealth
Model Litigant Obligation (para 4.2 and Appendix B of LSDs)
Claims are to be handled and litigation is to be conducted by the agency in
accordance with the Directions on The Commonwealth’s Obligation to Act as a
Model Litigant, at Appendix B, noting that the agency is not to start legal
proceedings unless it is satisfied that litigation is the most suitable method
of dispute resolution
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Key points cont’d
– honesty and fairness throughout legal work
– avoiding/narrowing disputes
– consistency
– emphasis on alternative and appropriate dispute resolution
(ADR)
– does not prevent Commonwealth from acting firmly
– on one view, same obligation now applies to all litigants
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Commonwealth as model litigant
Cases emphasise how points in Appendix B are distilled into a higher
standard of conduct for the Commonwealth
Dyson v Attorney General [1911] 1 KB 410
The Crown is ‘the fountain and head of justice and equity’.
Melbourne Steamship Co Ltd v Moorehead (1912) 15 CLR 333 at 342 per
Griffith CJ
‘I am sometimes inclined to think that in some parts - not all - of the
Commonwealth, the old-fashioned traditional and almost instinctive,
standard of fair play to be observed by the Crown in dealing with
subjects, which I learned a very long time ago to regard as
elementary, is either not known or thought out of date. I should be
glad to think that I am mistaken.’
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Thomas v Mowbray [2007] HCA 33 at [260]
The Commonwealth is ‘the best-resourced litigant in the
nation. It has access to lawyers of the highest talent. It
has reason to uphold legislation, where it choose to do so.
It is always supposed to act as model litigant, in the
tradition of the Crown.’
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Other legislation
Court rules imposes similar obligations to act appropriately on all
litigants rather than just government bodies:
Section 37M and 37N of Federal Court Act 1976 (Cth)
obligation on parties to act consistently with overarching
purpose to facilitate resolution of disputes as quickly,
inexpensively and efficiently as possible
Section 56 of Civil Procedure Act 2005 (NSW) outlines duty
on all parties to assist the Court to resolve and narrow issues
in dispute and a failure to do so may result in costs orders
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Civil Dispute Resolution Act 2011
— Civil Dispute Resolution Act 2011
— Parties to a dispute must try to resolve proceedings prior to
commencement of proceedings
— Applicant to proceedings is to file a statement setting out ‘genuine
steps’ before proceedings are commenced and respondent must
indicate if agree that ‘genuine steps’ have been taken
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Practical issues
— Many complaints arise in context of delay, acting consistently, taking
unnecessary technical points
— These themes emphasise importance of early and proper resourcing
of litigation
— Adequate briefing within an agency
— Proper reporting of significant issues
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Obligation in practice
— Our experience suggests that agencies take alleged breaches very
seriously – resources that would otherwise be devoted to defending
or resolving claims will be tied up in responding to such allegations
— Frequent experience is that opposition may make allegations in a
strategic way
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Scenarios
Scenario 1
— Agency successful in its defence of a claim, obtaining a costs order in
the process.
— Agency takes steps to enforce costs order.
— Unsuccessful party complains breach of model litigant obligation.
Discussion
— Is agency in breach?
— If not, why not?
— Other legislation may be relevant
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Scenarios
Scenario 2
— Party sues Commonwealth agency for horrific injuries allegedly as a
result of Commonwealth’s negligence.
— Available evidence suggests Commonwealth was indeed negligent
and that caused the injuries but party is out of time.
— Commonwealth pleads limitation defence.
— Party complains of model litigant obligation.
Discussion
— Is agency in breach?
— If not, why not?
— How might this be managed consistent with model litigant obligation?
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Scenarios
Scenario 3
— An agency is late in filing a Defence because the deponent for the
Defence (the lawyer with carriage of the matter) is unexpectedly on
leave.
— Another lawyer working on the matter serves the unfiled version of the
Defence on the other parties.
— The other parties complain a breach of model litigant.
Discussion
— Is agency in breach?
— If not, why not?
— How might this be managed consistent with model litigant obligation?
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Scenarios
Scenario 4
— An agency is late in serving an important witness statement during a
long hearing held over many months. No real prejudice to party
because hearing over many months.
— The other side complains and files an application to resist the
statement being admitted. Both sides spend considerable legal costs
in dealing with the application.
— The agency’s delay was caused by its failure to follow up the witness
in a timely manner.
Discussion
— Has there been a breach of the MLO?
— Impact of delay, resources
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Scenarios
Scenario 5
— In preparing for a hearing, an agency did not obtain its own
independent expert evidence.
— Instead the agency chose to rely on the expert evidence served by
the other party.
Discussion
— Has there been a breach of the MLO?
— What aspects of Appendix B are in play?
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Assistance to Commonwealth employees for
legal proceedings
(Appendix E
Legal Services Directions 2005)
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Why talk about Appendix E?
— Increase in claims in misfeasance against Commonwealth
employees.
— Misfeasance on the rise as negligence claims have been curtailed by
legislation limiting/capping liability for negligence claims.
— Claims in misfeasance carry risk of aggravated or punitive/exemplary
damages claims (such damages are far less likely in negligence
claims) – those damages not covered by Comcover.
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Key parts of Appendix E
Key paragraphs are probably 5,6,8 and 23.
Para 5 says expenditure should normally be approved in civil and criminal
proceedings if they arise out of employment and the employee acted
“reasonably and responsibly”.
Para 6 says do not grant assistance if the Commonwealth is likely to claim
contribution or indemnity from the employee if the Commonwealth is sued.
Can the Commonwealth seek contribution from an employee? Yes.
But surely only where that employee has acted terribly? No, merely
negligent employees can be sued by an employer at common law.
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Levels of assistance ─ implications
If it is not clear whether or not the employee’s behaviour meets the test for
assistance, the decision may be deferred altogether or the employee’s
defence funded until after the facts are ascertained (para 7).
The levels of assistance are at paragraph 11:
(a) costs of representation
(b) any damages and legal costs awarded
(c) a reasonable settlement
(d) a fine or penalty
If funding a defence, the employee must comply with App D – generally
Comcover appoint a panel member to act.
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Control of defence ─ implications
Para 8
“The indemnification of an employee against any costs or damages
payable to another party by the employee … in civil proceedings is only to
be approved on condition that the employee’s defence will be controlled
by the Commonwealth”.
“Any damages” means all damages including exemplary damages.
There can be no conflict of interest between the Commonwealth and the
employee so the Commonwealth can assume conduct of the employee’s
defence without risk.
Paragraph 23 means that employee must therefore comply with MLO.
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Limits on Commonwealth control
Criminal proceedings
— Criminal proceedings are not just about money, it is not possible to
indemnify for a criminal sentence.
Civil proceedings where no indemnity
— Although may have common interest in defence of claim, not a
complete confluence of financial interest between the Commonwealth
and the employee.
— May mean employee has to pay exemplary damages or even
compensatory and aggravated damages (for example when only legal
representation
— This creates a potential conflict of interest as employee might sue the
Commonwealth for financial loss.
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Practical considerations
— Ensure early and thorough consideration of indemnity by obtaining full
details in writing from Commonwealth employee.
— Take care with decision to indemnify – consider deferral or assistance
only when facts unclear or information not available.
— Where indemnity granted, ensure basis of indemnity is clearly set out
– may be vitiated by fraud.
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Future directions
Revision of the LSDs – timing and themes
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QUESTIONS?
Commonwealth officers should contact OLSC in
first instance: 02 6141 3642 or olsc@ag.gov.au.
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