Leader, Barry --- "The model litigant principle: Can the AGS stay competitive?" [1998] ALRCRefJl 29; (1998) 73 Australian Law Reform Commission Reform Journal 52

• Reform Issue 73 Spring 1998

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Reform Issue 73 Spring 1998

This article appeared on pages 52 – 55 of the original journal.

The model litigant principle: can the AGS stay competitive?

Barry Leader* argues the principle of the Commonwealth acting as a ‘model litigant’ in legal action is here to stay, and won’t restrict the Australian Government Solicitor’s competitiveness.

The view has been expressed that the model litigant principle is a significant impediment to the Australian Government Solicitor (AGS), restricting its ability to compete with private sector lawyers for Commonwealth litigation work. The purpose of this article is to demonstrate the falsity of that view. In essence the model litigant principle applies to the Commonwealth as a litigant, whether or not the Commonwealth is represented by the AGS. Rather than being a burden, compliance with the model litigant principle is a benefit and no Commonwealth litigation strategy should be without it.

The Commonwealth as litigant

Under section 64 of the Judiciary Act 1903 (Cth), in any suit to which the Commonwealth is a party, “the rights of parties shall as nearly as possible be the same, and judgment may be given and costs awarded on either side, as in a suit between subject and subject”. This equation of the Commonwealth’s rights with those of a private litigant suggests that the Commonwealth can behave like a private litigant. Why then, is the Commonwealth commonly urged to behave in a different fashion from private litigants, for example by waiving defences that may be available to it?

The answer is that the community expects the Commonwealth to meet higher standards than a private litigant. Experience has shown that merely complying with court rules, and solicitors’ and barristers’ professional rules, is not necessarily accepted as sufficient.

Conversely, the community expects the Commonwealth to deal properly with taxpayers’ money and, in particular, not to spend it without due cause and due process. Not all demands made on the Commonwealth should be met. The Commonwealth is also expected to act consistently in its handling of claims.

The balancing of these community expectations forms the basis for the model litigant principle, that is, how the Commonwealth should behave as a litigant.

What is the principle?

“...the defendants being an emanation of the Crown, which is the source and fountain of justice, are in my opinion bound to maintain the highest standards of probity and fair dealing, comparable to those which the courts, which derive their authority from the same source and fountain, impose on the officers under their control.” (Sebel Products Ltd v Commissioners of Customs and Excise (1949) 1 Ch 409, per Vaisey J at 413.)
“The Court and the Attorney-General, to whom the Crown Solicitor is responsible, have a joint responsibility for fostering the expeditious conduct of and disposal of litigation. It is extremely important that the Crown Solicitor’s Office set an example to the private legal profession as to conscientious compliance with the procedures designed to minimise cost and delay.” (Kenny v South Australia (1987) 46 SASR 268, per King CJ at 273.)
“The Crown should not take ‘technical points’.” (The Melbourne Steamship Co Ltd v Moorehead [1912] HCA 69; (1912) 15 CLR 333, per Griffith CJ at 342.)

Clearly, the model litigant principle requires fairness. Conversely, it does not preclude firmness - taxpayers’ money should not be expended improperly, and the Commonwealth’s legitimate interests should be protected.

As to fairness, the Commonwealth should act consistently in handling claims; deal with claims promptly; pay legitimate claims; and enter into reasonable settlements. It should not seek to take advantage of an impecunious opponent; contest matters which it accepts as correct; rely on purely technical defences where it has suffered no prejudice; or pursue frivolous appeals. The Commonwealth should also apologise where appropriate.

As to firmness, the Commonwealth should not cave in to spurious or vexatious claims; or take a ‘soft’ approach. Instead, it should appropriately test all claims; rely on legal professional privilege where appropriate; make public interest privilege claims objecting to disclosure of information; seek security for costs where appropriate (in one case the Commonwealth obtained an order for $4 million security for costs); oppose oppressive subpoenas/discovery; seek to strike out untenable claims; and act properly to protect the Commonwealth’s interests.

In particular, despite being commonly urged to do otherwise, the Commonwealth will generally rely on available statutes of limitation, which are designed to protect a defendant from unfair prejudice due to a plaintiff’s delay (see Commonwealth Policy on Pleading of Statutes of Limitation approved by the Attorney-General and dated February 1998). It will also generally seek to pursue costs when it is successful in litigation, thus reducing the potential for vexatious proceedings to be instituted against it.

To whom the principle applies

The authorities establish that the model litigant principle applies both to government clients and to their lawyers - whether AGS, in-house departmental lawyers or private lawyers. Ultimately, the principle is the model litigant principle.

What the principle covers

The principle covers all aspects of litigation, for example:

• settlements are to be in accordance with legal principle and practice - the Commonwealth will settle claims for appropriate amounts if, but only if, there is a meaningful prospect of liability;

• grounds of claim/defence must be legitimate and appropriate;

• disclosure of documents must be thorough - which can be a difficult task with a body as big and diverse as, and which has been established for as long as, the Commonwealth;

• disclosure of adverse matters must meet the highest standards - compliance with bar rules or solicitors’ rules may not be regarded as sufficient;

• part payments of claims should be made where appropriate;

• partial settlements of separate parts of claims should be made where appropriate;

• unnecessary delays should be avoided;

• appropriate reasons for rejections of claims should be given; and

• appeals should be justifiable.

The Commonwealth can properly contest a case without being sure of winning it - certainty does not normally exist in litigation. However, there must be a proper defensible basis justifying the course adopted by the Commonwealth, for example, there are reasonable prospects of success. Alternatively, if there is substantial doubt about prospects of success, there might be a legitimate need to clarify the law.

Accountability

If the Commonwealth fails to comply with the model litigant principle, the government, its ministers, officials and lawyers are accountable through a number of mechanisms, including parliamentary questions and inquiries; Auditor-General and Ombudsman inquiries; the courts (noting the Commonwealth’s special position as a large and long term litigant appearing before the courts on a regular basis); and the media.

The potential for this accountability exists on all occasions and in relation to all cases. However, somewhat ironically, the accountability process can be greater when the Commonwealth wins a case than when it loses a case.

It is not uncommon for a Commonwealth litigation success to be followed by allegations that the success was due to unfair or improper conduct. These allegations have been known to extend to the Commonwealth’s officers, solicitors, and barristers. Conversely, allegations can be made that the Commonwealth settled a case, which it should have contested, or settled a claim against it for an excessively high amount. In some cases, major inquiries have resulted.

This accountability provides the practical substance to what might otherwise be thought to be a theoretical toothless policy. The accountability processes are not limited to officers in Canberra - rather, the processes extend to officers throughout Australia. Experience has shown that a government officer (wherever he or she may be located) who ignores the model litigant principle does so at his or her peril. Conduct by a government officer which does not meet the fairness/firmness test is not acceptable in the Australian Public Service: nor would it be acceptable in our society.

Will the principle go away?

The model litigant principle is here to stay. Community expectations of government, and corresponding government accountability, are increasing, not decreasing. The courts continue to confirm the existence of the principle (see, for example, SCI Operations Pty Ltd v Commonwealth (1996) 139 ALR 595, per Beaumont and Einfeld JJ at 613).

The Judiciary Amendment Bill 1997, proposed by the Commonwealth government to give effect to its policy of untying the provision of legal services to the Commonwealth, contains provisions specifically designed to enable the Attorney-General to maintain the public interest in the conduct of Commonwealth litigation, in particular the model litigant principle. Those provisions will enable the Attorney-General to issue Legal Services Directions applying to Commonwealth legal work (new section 55ZF). It is proposed that such directions will specify “the obligation that the Commonwealth should act as a model litigant and the content of this obligation” (Explanatory Memorandum - pages 8-9). Speaking broadly, Legal Services Directions will be capable of applying to the Commonwealth, AGS, and private lawyers acting for the Commonwealth (new section 55ZG).

Pending the passing of the proposed legislation, the Attorney-General has issued an instruction requiring the Commonwealth to act as a model litigant. That instruction is incorporated into the Commonwealth Policy for Handling Monetary Claims approved by the Attorney-General for the purposes of Regulation 9 of the Financial Management and Accountability Regulations. That regulation requires a person approving expenditure of public money to be satisfied that the expenditure is in accordance with Commonwealth policies. Also, compliance with the model litigant principle is a condition of untying individual Commonwealth litigation matters on the ad hoc basis which currently exists pending passing of the Judiciary Amendment Bill.

The Office of Legal Services Coordination (OLSC) in the Attorney-General’s Department has a continuing responsibility for advising the Attorney-General on the development of the model litigant principle and on its compliance, whether by AGS or by private lawyers acting for the Commonwealth. OLSC’s website (www.law.gov.au/olsc) includes a copy of the Attorney-General’s instruction setting out the terms of the model litigant obligations.

The model litigant principle will not go away.

Conclusion

The model litigant principle is a benefit, not a burden. No government litigation strategy should be without it.

It is clearly in Commonwealth clients’ interests to be represented by a legal services provider who fully understands the nature and purpose of the model litigant principle and government accountability. Without the benefit of that understanding, the client is in jeopardy of failing to meet community expectations, thus failing government accountability processes, and suffering the consequences of that failure.

AGS has been, and will remain, a part of government. AGS has an in-depth understanding of the model litigant principle, and a well established culture of complying with it. AGS is accordingly well placed to ensure that Commonwealth clients receive comprehensive and authoritative advice in relation to the model litigant principle, and thus to keep AGS’ clients out of trouble. This greatly enhances AGS’ competitiveness.

* Barry Leader is the Deputy Government Solicitor (Litigation), with the Office of the Australian Government Solicitor.