ETH THICA CAL CONSIDERATIONS AFFECTING G GOVE VERN RNMENT - - PowerPoint PPT Presentation

“ETH THICA CAL CONSIDERATIONS AFFECTING G GOVE VERN RNMENT LITIGANTS NTS”

CHAIR: MICHAEL FLYNN QC PANEL: MEREDITH SCHILLING KATHERINE A BRAZENOR MATTHEW MENG

Wher ere d e do t the mod

• del

el litigant r rules es c come e from

• m?

Special power […] inheres in the nature of government itself, so judges expect high standards of competence, candour and civility from government parties and their lawyers. These expectations are typically embodied in model litigant rules, which set out acceptable standards and boundaries for the conduct of litigation with the aim of resolving disputes efficiently and appropriately. Productivity Commission, 2014 final report into “Access to Justice Arrangements”

• Exist both at common law and pursuant to statute (Legal Services

Directions)

• Statutory ML rules exist for both Cth and State entities (but the focus
• f this presentation is Cth ML rules)
• The content and methods of enforcement of common law and

statutory ML rules differ, which is important for non-government litigants to be aware of

Why m migh ght m mod

• del

el l litigant rules es b be required ed?

the inherent power of government; the proper role of government being to act in the public interest (as it has no legitimate private interest); and the large quantity of resources at governments’ disposal […] These can contribute to a power imbalance in favour of governments when pitted against private individuals […] Governments also derive power from their frequent-player status, giving rise to advantages over other litigants through their greater expertise, experience, access to specialist knowledge and established reputation before courts and tribunals […] Governments can be important role models in setting benchmarks for behaviour and conduct across the system […] Productivity Commission, 2014 final report into “Access to Justice Arrangements”

Sta tatute: Cth Legal S Services es Direc ection

• n

What & & Where?

• The Commonwealth “Model Litigant Policy” is a Legal Services Direction

issued by the Commonwealth Attorney-General pursuant to s 55ZF of the Judiciary Act 1903 (Cth).

• Appendix B, Legal Services Direction 2017 (Cth).
• Para 1, “The Obligation”, states:

Consistently with the Attorney-General’s responsibility for the maintenance of proper standards in litigation, the Commonwealth and Commonwealth agencies are to behave as model litigants in the conduct of litigation.

• Para 2:

being a model litigant requires that the Commonwealth and Commonwealth agencies, as parties to litigation, act with complete propriety, fairly and in accordance with the highest professional standards.

Sta tatute: Cth Legal S Services es Direc ection

• n

When & & to whom does it apply?

• The obligation applies to litigation (including before courts, tribunals,

inquiries and in arbitration and other alternative dispute resolution processes) involving (para 2):

• Commonwealth Departments;
• other Commonwealth agencies; and
• Ministers and officers where the Commonwealth provides a full indemnity in

respect of an action for damages brought against them personally.

• The Cth agency with responsibility for the litigation is primarily

responsible for compliance with the Cth MLP – but lawyers engaged in the litigation (both AGS and private, e.g. Counsel) must comply with the Cth MLP and assist their client to do so (para 2, s 55ZG, Judiciary Act 1903 (Cth)).

Sta tatute: Cth Legal S Services es Direc ection

• n

Who can e enforce t the Cth ML MLP?

• Key distinction between model litigant rules at common law

(addressed later) and under statute is enforcement.

• Section 55ZG, Judiciary Act 1903 (Cth):

(2) Compliance with a Legal Services Direction is not enforceable except by, or upon the application of, the Attorney-General. (3) The issue of non-compliance with a Legal Services Direction may not be raised in any proceeding (whether in a court, tribunal or other body) except by,

• r on behalf of, the Commonwealth.

* Office of Legal Services Coordination is charged with administering the Legal Services Directions (inc Cth MLP) – but role is more guidance than active monitoring or imposing sanctions.

Sta tatute: Cth Legal S Services es Direc ection

• n

Who can e enforce t the Cth MLP LP? (cont.) t.)

If you are a party to a claim and/or litigation involving the Commonwealth and you want to make an allegation of non- compliance, you should contact the agency directly and particularise your concerns relating to their compliance with the Directions. OLSC does not resolve complaints from members of the public about agency

• compliance. If you contact OLSC, you will be advised to forward your

complaint to the relevant agency. That agency will notify OLSC of your concerns in accordance with the Compliance Framework. Guidance Note 3, OLSC, [29]

Sta tatute: Cth Legal S Services es Direc ection

• n

What is s the e con

• ntent of
• f the

e Cth ML MLP?

Para 2 (“The Nature of the Obligation”): The Commonwealth and its agencies must “act honestly and fairly in handling claims and litigation brought by or against the Commonwealth or a Commonwealth agency”, by:

• Dealing with claims promptly and not causing unnecessary delay in the handling
• f claims and litigation;
• Making an early assessment of:
• The Commonwealth’s prospects of success in legal proceedings that may be brought against

the Commonwealth; and

• The Commonwealth’s potential liability in claims against the Commonwealth;
• Paying legitimate claims without litigation, including making partial settlements
• f claims or interim payments, where it is clear that liability is at least as much as

the amount to be paid;

• Acting consistently in the handling of claims and litigation;

Sta tatute: Cth Legal S Services es Direc ection

• n

What is s the e con

• ntent of
• f the

e Cth MLP? P? (con

• nt.)
• Endeavouring to avoid, prevent and limit the scope of legal proceedings wherever

possible, including by giving consideration in all cases to alternative dispute resolution before initiating legal proceedings and by participating in alternative dispute resolution processes where appropriate;

• Where it is not possible to avoid litigation, keeping the costs of litigation to a

minimum, including by:

• Not requiring the other party to prove a matter which the Commonwealth or agency knows

to be true;

• Not contesting liability if the Commonwealth or the agency knows that the dispute is really

about quantum;

• Monitoring the progress of the litigation and using methods that it considers appropriate to

resolve the litigation, including settlement offers, payments into court or alternative dispute resolution; and

• Ensuring that arrangements are made so that a person participating in any settlement

negotiations on behalf of the Commonwealth or a Commonwealth agency can enter into a settlement of the claim or legal proceedings in the course of the negotiations.

Sta tatute: Cth Legal S Services es Direc ection

• n

What is s the e con

• ntent of
• f the

e Cth MLP? P? (con

• nt.)
• Not taking advantage of a claimant who lacks the resources to litigate

a legitimate claim;

• Not relying on technical defences unless the Commonwealth’s or the

agency’s interests would be prejudiced by the failure to comply with a particular requirement;

• Not undertaking and pursuing appeals unless the Commonwealth or

the agency believes that it has reasonable prospects for success or the appeal is otherwise justified in the public interest; and

• Apologising where the Commonwealth or the agency is aware that it
• r its lawyers have acted wrongfully or inappropriately.

Sta tatute: Cth Legal S Services es Direc ection

• n

Limit its s on

• n t

the e sc scop

• pe of
• f t

the e Cth ML MLP

• The Cth MLP does not preclude:
• the Commonwealth and its agencies from acting firmly and properly to

protect their interests;

• all legitimate steps being taken to pursue claims by the Commonwealth and

its agencies and testing or defending claims against them;

• pursuing litigation in order to clarify a significant point of law, even if the
• ther party wishes to settle the dispute (although in certain circumstances,

such as a test case in the public interest, it will be appropriate for the Commonwealth to pay costs); or

• the Commonwealth from enforcing costs orders or seeking to recover its

costs.

Commo mon law – model lit litig igant obli ligations

• Long-standing principle at common law.
• The Melbourne Steamship Company Ltd v Moorehead (1912) 15 CLR 333:

Griffiths CJ could not “refrain from expressing […] surprise” that a “purely technical point of pleading” was taken on behalf of the Crown.

• “It used to be regarded as axiomatic that the Crown never takes technical

points, even in civil proceedings, and a fortiori not in criminal proceedings”.

• “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.”

Commo mon law – model lit litig igant obli ligations

• Finn J in Hughes Aircraft Systems International v Airservices Australia

(1997) 76 FCR 151 noted that the “model litigant” standards “exacted from the Crown” (and the principle of fair play more broadly) reflect the following “policies in the law”:

• of protecting the reasonable expectations of those dealing with public bodies;
• of ensuring that the powers possessed by a public body, “whether conferred

by statute or by contract”, are exercised “for the public good”; and

• of requiring such bodies to act as “moral exemplars” (namely, government

and its agencies should “lead by example”).

Commo mon law – model lit litig igant obli ligations Con Content of

• f the

e ob

• blig

ligatio ions

Includes obligations of:

• “conscientious compliance with the procedures designed to minimise cost and delay”,
• “assisting the court to arrive at the proper and just result”,
• “not taking purely technical points of practice and procedure”,
• “not unfairly impairing the other party’s capacity to defend itself”
• “not taking advantage of its own default”.
• It is a higher duty than the duty owed by every civil litigant to the court to act

fairly and appropriately.

• It goes beyond the requirement for lawyers to act in accordance with their ethical
• bligations and may require more than merely acting honestly and in accordance

with the law and the court rules.

• Cth MLP may be used as an aid in understanding the content of the obligations at

common law (ASIC v Rich [2009] NSWSC 1229 at [530]).

Commo mon law – model lit litig igant obli ligations Who c can enforce these obligations?

• The other party may complain to the court at the hearing about non-

compliance with the duty.

• Once raised, the court has the power to deal with the matter “in an

appropriate way, to ensure the just, quick and cheap resolution of the real issues” (ASIC v Rich [2009] NSWSC 1229 at [524]).

Prop

• pos
• sed

ed S Statutor

• ry Refor
• rm
• A brief history lesson…
• Productivity Commission “Access to Justice Arrangements” Final Report

(2014).

• One aspect of the civil dispute resolution system considered was model

litigant obligations.

• Observed:
• Limited evidence about compliance and enforcement of the ML obligations (and the

evidence it had suggested variable compliance amongst departments and agencies)

• Concern that they lack enforceability, creating weak incentives for governments to

comply

• Recommended that compliance with the obligations ought to be

monitored and enforced, including by establishing a formal avenue of complaint to government ombudsmen for parties who considered the

• bligations had not been met.

Prop

• pos
• sed

ed S Statutor

• ry Refor
• rm (con
• nt.)
• April 2016: Cth government rejected this recommendation, stating:

The question of compliance with the Directions, including the Model Litigant Obligations, is a matter between the Attorney-General and the relevant Commonwealth agency or Department. Any other approach could give rise to technical arguments and result in additional costs and delay in litigation involving the Commonwealth. Where an individual is unhappy with the handling of their complaint by an agency, they may seek a review by the Commonwealth Ombudsman.

Prop

• pos
• sed

ed S Statutor

• ry Refor
• rm (con
• nt.)

Judicial Amendment (Commonwealth Model Litigant Obligations) Bill 2017 (Cth)

• Introduced into the Senate on 15 November 2017 as a Private

Member’s Bill by Sen. David Leyonhjelm.

• EM expressly refers to the 2014 findings and recommendations of the

Productivity Commission.

• The Bill seeks to subject the Cth to enforceable model litigant
• bligations.

Model liti tigant t principles in practi tice

“the burden of this fair dealing standard is best appreciated in its particular exemplifications in individual cases”

Scott v Handley [1999] FCA 404 at [45] (Spender, Finn and Weinberg)

North W West Melbourne R Recycling ng

• Justice Croft:

“The issue which fell for determination in this proceeding was of a kind that might well horrify the taxpayers of Victoria who fund the State of Victoria, not to mention Victorian business people who fear they might one day be a party to such litigation.”

North W West Melbourne R Recycling ng

• Running a case with no chance of success
• Breach obligation 2(e):

“pay legitimate claims without litigation, including making partial settlements of claims or interim payments, where it is clear that liability is at least as much as the amount paid”

• Breach obligation 2(a):

“act fairly in handling claims and litigation brought by or against the State or an agency”

• Indemnity costs against Commissioner

North W West Melbourne R Recycling ng

• Model litigant obligations inform and particularise overarching
• bligations under Civil Procedure Act
• Breach can result in costs orders under Civil Procedure Act

Shord

• A very divided court
• Tribunal’s error not seized upon by taxpayer on appeal in timely

manner

• Commissioner did not proactively draw attention to and concede

error as ground of appeal

• White and Siopis JJ:

“counsel for the Commissioner acted with propriety in both advancing the interests of her client as a model litigant, and in discharging her duty to the Court”

Shord – Logan J

• Commissioner should have proactively drew attention to and

conceded Tribunal error

• Breach of model litigant obligations
• Would have awarded indemnity costs against Commissioner if

Tribunal error had been only ground of appeal

• Other possible consequences of breaches: professional misconduct;

contempt of court; attempt to pervert course of justice

Gould and Donoghue

• Allegations of conscious maladministration
• Gould: Use of information unlawfully obtained under tax information

exchange treaty

• Donoghue: Use of possibly privileged materials in issuing assessments
• Section 166 requires Commissioner to act on information in making

assessments

• Did not address model litigant obligations

Challenges of self-represented litigants

• Obligation of fairness in case of self-represented litigants may require Court
• r Tribunal to:
• identify the central issues to self-represented party
• draw a party’s attention to the relevant legislative provisions and key decision(s) on

the issue being determined.

• ask a party questions designed to illicit information in relation to the issues which are

central to the determination of the particular proceedings;

• assist a party to conform to procedural rules designed to avoid unfairness
• draw a party’s attention to the relative weight to be given to Bar table statements as
• pposed to sworn evidence.
• Identify and assist a party to frame a proper question of law on appeal
• Model litigant must assist the Tribunal or Court to meet those
• bligations

Charara v v Commi mmisioner of T Taxation [2016] FCA 451 (Wigney J)

• Litigant in person – “a very experienced litigant”
• Unsuccessful recusal and adjournment applications
• Taxpayer directed to return to witness box
• Collapsed – paramedics attend – taken by ambulance to Hospital
• Tribunal continued hearing until lunch
• After lunch, Commissioner applied to have application dismissed

under s 42A(5) of AAT Act

• Tribunal dismissed application

Wigney J:

• Tribunal
• misconstrued and misapplied s 42A(5)
• denied the Taxpayer procedural fairness
• failed to give taxpayer any, or any appropriate, opportunity to respond or make

submissions about the findings that underpinned its decision

• made a decision which was legally unreasonable
• As to the Commissioner’s conduct:
• The Tribunal was encouraged to dismiss the application by the Commissioner. The

Commissioner did not counsel or caution the Tribunal member against dismissing the application, despite knowing that Taxpayer had been treated by paramedics.

“While Mr Charara was a difficult opponent…and was self-represented, caution and restraint was clearly warranted. It was not excused. It is difficult to avoid the conclusion that the Commissioner did not discharge his

• bligations as a model litigant in the particular circumstances of this matter”

Comaz (Aust) Pty Ltd v Commissioner of State Revenue [2015] VSC 294 (Croft J)

• Lay person represented corporate Taxpayer
• Tribunal failed to warn or advise witness as to nature and effect of Jones v Dunkel

inference

• Commissioner relied on inference in closing submissions – the Applicant sought

to counter the inference in her closing submissions, but it was too late to cure the evidentiary deficiency

• Commissioner contended that Applicant was not “self-represented” as such, but

rather a party represented by its own choosing albeit not by a legal representative

• This submission met short shrift – “ignore[s] the basic fundamental rights which a

court or tribunal must strive, always, to protect”

• Croft J:

……..the role of a government agency in litigation – absent any legitimate commercial interest in the outcome – is to ensure that all the relevant material is brought before the court or tribunal to ensure that a decision informed by all of the evidence is reached.

Come mez Model Litigant findings

• Incumbent upon a party who is subject to the Model Litigant

Guidelines to ensure the other side is made aware that the evidence should be called, even where the tribunal had failed to do so.

• Having failed to do so “…. the least which should have been expected

is that the Commissioner would have refrained from relying on technical rules of evidence or procedure to gain a forensic advantage. That such restraint was not exercised, but rather a Jones v Dunkel inference sought and relied upon, must, in my view, be seen as a serious breach of the Model Litigant Guidelines, both in letter and spirit.”

Comaz – model litigant findings (cont.)

• Commissioner sought to draw distinction between the Tribunal’s
• bligations to a self-represented litigant, and those of the

Commissioner

• Croft J – ““fail to grasp…the manner in which the guidelines should be

seen to operate”

• Rather – Commissioner, as a model litigant, must assist the Tribunal
• r Court to meet the above obligations…..”they exist and are

applicable at all times”

Scott v Handley [1999] FCA 404; 58 ALD 373 (Spender, Finn and Weinberg JJ)

• Issue was the appropriateness of a refusal to grant an adjournment to

litigants in person who claimed they were not ready to proceed to a final hearing

• “In the present instance the second respondent
• (i) was in a position of obvious advantage in relation to unrepresented litigants;
• (ii) was significantly in default in complying with procedures designed to secure the

fair and orderly preparation of the matter for hearing;

• (iii) served the affidavits on the appellants at an extremely late date with a

consequential likely impairment of their capacity to prepare properly for a final hearing;

• (iv) did not inform his Honour of the default and of its possible consequences; and
• (v) took advantage of the inability of the appellants to articulate properly the basis

for, and to secure, an adjournment. In our view the conclusion is inescapable that the second respondent has fallen considerably short of the standard properly to be expected of the Commonwealth.”

LVR (WA) P Pty L Ltd v v Administrative A Appeals T Tribunal [2012] F FCAFC 9 90 ( (North, Log , Logan a and R Rob

• bertson)
• On appeal to the FCA, it was alleged that the Tribunal had failed to

take into account an affidavit filed by the Applicant. The primary judge was taken to various paragraphs of the Tribunal’s reasons, without explanation that the material there was copied mostly verbatim from the Commissioner’s submissions

• FCAFC - “gravely concerned” that copying not brought to attention of

the primary judge

• “Counsel for the appellants had not appeared in the matter before

the Tribunal so that may provide some explanation. But counsel for the Commissioner had so appeared. In addition, the Commissioner was or should have been acting as a model litigant.”

At [42]

“being a model litigant requires the Commonwealth and its agencies, as parties to litigation, to act with complete propriety, fairly and in accordance with the highest professional standards. This obligation may require more than merely acting honestly and in accordance with the law and court rules. It also goes beyond the requirement for lawyers to act in accordance with their ethical obligations……. In our

• pinion, counsel representing the executive government must pay

scrupulous attention to what the discharge of that obligation requires, especially where legal representatives who are independent of the agency are not involved in the litigation.”

Mahen enth thirarasa v State R e Rail Au Author

• rity

ty [ [2008] NSWCA 2 A 201 (Basten JA, Giles and Bell JJA agreeing)

• Application for costs order against SRA on the basis that, although SRA did not

actively oppose the appeal, it did not consent when it ought to have done so.

• “…… If it was of the view that the order could not be defended, it was

inappropriate for the SRA to stand by and effectively require the appellant to persuade the Court of the correctness of the opinion.”

• The principles applicable to a model litigant required it to deal with claims

promptly, not to cause unnecessary delay, to endeavour to avoid litigation wherever possible, not to resist relief which it believes to be appropriate and not to decline to provide appropriate assistance to the court or tribunal whether expressly sought or not. It is probable that those principles were not applied.

• SRA ordered to pay appellant’s costs on appeal to the Full Court and at first

instance

BREACH? CASE EXAMPLES OBVIOUS/SERIOUS BREACH Running hopeless case Northwest Recycling Commonwealth of Australia v Smith [2007] VSWCA 168 Encouraging Tribunal to dismiss application when self-represented applicant taken gravely ill Charara Relying on technical rules of evidence against self-represented litigant where rules had not been explained to litigant Comez POSSIBLE BREACH Requiring applicant to prove case in circumstances where application is not opposed (i.e. fence- sitting) Mahenthirarasa Breaches by omission. For example:

• not bringing copying of submissions to the Court’s attention
• where opposed to a litigant in person, not informing the Court of the full factual circumstances

relevant to the matter to be determined by the Court

• again where opposed to a litigant in person, serving material at a very late stage thereby

causing severe disadvantage to the applicant LVR Scott v Handley Where applicant is represented, relying on applicant’s failure to articulate precise claim, in circumstances where character of jurisdictional error is patent Shord NO BREACH Proactively promoting patent points adverse to interest Palmer SZLPO

Prop

• pos
• sed

ed S Statutor

• ry Refor
• rm
• Bill proposes amendments to Judiciary Act 1903 (Cth) and Ombudsman Act

1976 (Cth) to:

• Require the Attorney-General to issue binding model litigant obligations
• Require the Commonwealth Ombudsman to investigate complaints in relation to

contraventions of the model litigant obligations and report annually on complaints received by it (removes from the IGT responsibility for complaints in respect of such matters)

• Insert new s 55ZGA which applies “if a party to a proceeding has made a complaint to

the Commonwealth Ombudsman that a Commonwealth litigant, or a person acting for a Commonwealth litigant has contravened or is likely to contravene” the model litigant guideline. Where s 55ZGA applies, the Court may on application of the complainant and “if in the opinion of the court it is desirable to do so…..” stay proceedings or part thereof and subject to any conditions

• New s 55ZGB applies if Ombudsman has investigated or decided not to investigate a

complaint, or 60 days have passed since the complaint was made. The Court may make “any order it considers appropriate”…..if “satisfied….that the Commonwealth or its representative “contravened or is likely to contravene” the ML obligations.

• New ss55ZI(3) – has effect that a court may make an order against any person acting

for the Commonwealth (cf. current s 55ZI(2)).

ATO Submission on Bill

• Bill has been referred to the Senate Legal and Constitutional Affairs Committee for inquiry and

report by 8 May 2018. Nine responses to date.

• ATO Submission lodged February 2018
• Does not support the Bill or elevation of ML obligations to a substantive right
• Bill would allow litigants to side-step substantive issues by raising dubious complaints about ML breaches –

impact on operation of ss 175 ITAA 1936, TAA 14ZZM and 14ZZR – impact on urgent actions eg. freezing

• rders
• Delay – impact on revenue and challenge to integrity of the tax system – Costs
• Exposes tax officers and others acting for the ATO to personal sanctions – may result in risk-aversive decision-

making

• Existing mechanisms for dealing with complaints are sufficient. The submission references:
• Existing court rules
• Action for maladministration
• Professional obligations
• Inherent jurisdiction of the court (including the ability to make costs orders against the ATO, to ensure

procedural fairness and to control instances of abuse)

• Technical deficiencies of the Bill – eg. does not cover Tribunal proceedings; the Bill is uncertain as

to how investigation by Commonwealth Ombudsman interacts with any orders made by the Court.

ATO Response (cont.)

The Bill is an unnecessary response to a minor issue Statistics on Model Litigant complaints against ATO* *ATO Submission to the Inquiry into Judiciary Amendment (Commonwealth Model Litigant Obligations) Bill 2017, February 2018, p. 4. The complaints are described in the submission as “minor procedural points, inadvertent errors

• r time delays”.

Financial year Number of complaints Confirmed complaints 2017 14 2 2016 16 7 2015 16 8 2014 23 3 2013 29 2