Marianne Peterswald, Australian Government Solicitor and

1. Comcover Legal Service Provider Forum Series Legal Services Directions and Model Litigant Obligation26 November 2013 Marianne Peterswald, Australian Government Solicitor and Catherine Fitch, Assistant Secretary, Office of Legal Services Coordination

2. Outline of presentation • Legal Services Directions – source and basics • Key points about Model Litigant Obligation (MLO) • Practical points • Compliance • Obligation in practice ─ some scenarios • Appendix E • Future revisions of the LSDs – timing and themes

3. 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

4. Key points Claims and litigationby 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

5. 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 (d) endeavouring to avoid, prevent and limit scope of legal proceedings, including giving consideration to ADR in all cases, before commencing litigation and participating where appropriate;

6. 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in dealing with subjects, which I learned a very long time ago to regard as elementary, is either not known or thought out of date.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.’

7. 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.’

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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?

14. 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?

15. 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

16. 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?

17. Assistance to Commonwealth employees for legal proceedings (Appendix E Legal Services Directions 2005)

18. 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.

19. 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.

20. 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: • costs of representation • any damages and legal costs awarded • a reasonable settlement • a fine or penalty If funding a defence, the employee must comply with App D – generally Comcover appoint a panel member to act.

21. 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.

22. 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.

23. 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.

24. Future directionsRevision of the LSDs – timing and themes

25. QUESTIONS?Commonwealth officers should contact OLSC in first instance: 02 6141 3642 or olsc@ag.gov.au.