This chapter outlines the key issues raised in evidence to the committee:
Current compliance with, and oversight of, the model litigant
The proposed role for the courts.
The proposed role for the Ombudsman.
Possible increases to costs and delays.
Issues relating to lawyers.
The chapter concludes with the committee's view and its recommendations.
Current compliance with, and oversight of, the obligation
The evidence received by the committee underlined the importance of
Commonwealth compliance with the model litigant obligation.
As the Attorney‑General's Department stated, '[i]t's imperative that the
Commonwealth conducts itself in a manner that assists the court and supports
access to justice.'
While the importance of compliance is broadly recognised, the committee received
mixed evidence regarding the extent to which Commonwealth litigants actually
comply with the obligation and whether existing oversight is adequate.
These issues are discussed in turn below.
Current compliance with the
The Attorney‑General's Department, which administers the
obligation, told the committee that it 'does not consider there is any evidence
of systemic issues with agency compliance with the model litigant obligation'. It
further noted that the Productivity Commission did not suggest there were
systemic issues with Commonwealth compliance.
In the Attorney‑General's Department's experience, Commonwealth
entities and their legal representatives take the obligation very seriously.
This was reflected in submissions from both the Australian Taxation Office (Tax
Office) and the Department of Human Services.
As the Attorney‑General's Department explained:
The department's experience indicates that entities regularly
reference the model litigant obligation in making decisions about the handling
of matters and that training on the obligation is part of staff development.
When complaints are made, departments will ensure resources are available to
assess those complaints.
The Attorney‑General's Department argued that there have been very
few confirmed breaches of the obligation compared to the tens of thousands of
legal matters involving the Commonwealth and its entities each year.
As noted in Chapter 1, the OLSC receives notifications regarding
possible breaches of the obligation from a number of sources. The following
table presents data provided by the Attorney‑General's Department which
the number of notifications the department received about
possible non‑compliance with the Directions across Commonwealth legal
of the total notifications, the number that related to the obligation;
of notifications related to the obligation, the number of
Table 3.1—Compliance data
provided by the Attorney‑General's Department.
relating to the Directions
to the obligation
incidences of non‑compliance with the obligation
The Attorney‑General's Department made three observations about the
First, in each instance of noncompliance the department was
satisfied with the agency's assessment and remedial actions proposed or
undertaken by the agencies. Second, within the volume of litigation these
figures represent a very low number of noncompliance. Third, many of the
complaints of perceived noncompliance do not, in fact, stand up when
investigated. People might be unhappy with an outcome, but that does not mean
that the Commonwealth has acted improperly. Indeed, the complainant may be
unhappy with the outcome of their case because the Commonwealth, in fact, acted
properly to protect the public interest with respect to that case.
The department also stated that of confirmed breaches, 'many of them are
relatively minor...They're not necessarily all of the worst degrees, but we still
record them as being breaches if they don't strictly comply with the
Other government submitters made similar points regarding their
respective litigation caseloads. For example, the Department of Home Affairs
submitted that it determines the vast majority of allegations that it breached
the obligation to be spurious or unsubstantiated.
The Tax Office indicated that its records show very few breaches compared to
the several thousand litigation matters in which it is involved each year.
The following table presents data provided by the Tax Office which
the number of reported breaches of the obligation that were
investigated and finalised; and
of reported breaches, the number of breaches that were confirmed.
Table 3.2—Reported and
confirmed breaches of the model litigant obligation by the Australian Taxation
||Reported breaches of
the obligation that were investigated and finalised
of the obligation
The Tax Office noted that it generally tries to avoid disputes. However,
it was suggested there are three areas of matters to be litigated:
One is where there's an important issue of law to be
clarified for the general community. The second is where you've got egregious
conduct, where, out of fairness to all other taxpayers, we have to ensure that
we take that conduct on. The third is where you have the intractable dispute
where someone wants a deduction for their bedsocks or something, where, out of
fairness, again, to all other taxpayers, we can't let that one go.
In addition to data provided by government departments, which conduct
the litigation, the committee received data from agencies that handle
complaints: the Commonwealth Ombudsman and the Inspector‑General of
The Ombudsman told the committee that his office does not classify
complaints according to whether or not the complaint relates to model litigant
obligations. Nonetheless, the Ombudsman estimated that his office receives 'a
very small number' of complaints relating to the obligation—that is, 'in the
order of three, four or five a year'.
The Inspector‑General of Taxation told the committee that he has
been responsible for complaints regarding the administrative actions of the Tax
Office and the Tax Practitioners Board since 1 May 2015. In that
time, his office has received over 7,000 complaints and, based on the office's
experience, complaints about tax administration 'often include' dissatisfaction
with litigation conduct and model litigant obligation matters.
Aside from data provided by government agencies, a number of individuals
and organisations also provided evidence regarding breaches of the obligation.
This evidence generally indicated that non‑compliance is more common than
official data suggest.
For example, Civil Liberties Australia submitted that the government has
a 'reputation among small law firms and court‑aware members of the public
as a bully in litigation'.
The Chief Executive Officer of Civil Liberties Australia,
Mr William Rowlings, referred to breaches of the obligation and suggested
that 'there are hundreds, probably thousands, maybe tens of thousands over the
past 10 years—certainly thousands'.
Some submitters singled out the compliance record of particular
government agencies. For example, Cleary Hoare Solicitors submitted that its
experience with the Tax Office and the Australian Government Solicitor has
shown that 'both entities often fall short of complying with Model Litigant
Obligations...throughout the dispute resolution process.'
Self-Employed Australia also took issue with the Tax Office, arguing
that it 'almost routinely' breaches the obligation in relation to small
business people. The Executive Director of Self‑Employed Australia, Mr
Ken Phillips, argued that the Tax Office 'certainly play every legal game that
they can. Every technical trick that might be available is played. Every delay,
every appeal—everything that you can possibly do.'
The Australian Lawyers Alliance (Lawyers Alliance) referred to the
example of Comcare. It claimed that its members have found that Comcare rarely
implements the model litigant obligation and have seen examples of an
'increasingly aggressive approach to retrieve compensation'.
Further, the National Spokesperson for the Lawyers Alliance, Dr Andrew Morrison RFD SC,
told the committee (speaking generally, not specifically in relation to
I can recall, for example, one case where I lodged a
complaint in respect of the model litigant rules. After the case was over, I
received an expression of regret, which didn't assist at all because the case
was concluded by then.
A number of individual submitters also detailed for the committee their
personal experience of alleged breaches.
For instance, Mr Roderick Douglass told the committee that the Tax Office
accused him of fraud, causing him to accrue legal costs and 'six to nine months
of stress'. Mr Douglass said that when the matter went to court, the Tax Office
stated that it had made a mistake and withdrew.
Mr Kia Silverbrook alleged that, in a case concerning his business, the
Office of the Fair Work Ombudsman 'specifically and consciously ignored its
obligations as a model litigant, even when these obligations were pointed out
to it many times'.
In addition to these allegations of non‑compliance, some inquiry
participants suggested that the Attorney‑General's Department's
compliance data may not be entirely reliable.
Civil Liberties Australia, for example, claimed that the OLSC has
insufficiently monitored compliance with the obligation.
It argued that the OLSC relies on agencies to report when they have breached
the obligation, and that this kind of self-reporting is unreliable.
While the Directions require Commonwealth entities to advise counsel
about the obligation,
the Attorney-General's Department confirmed that the Directions do not require
Commonwealth entities to advise private litigants about the existence of the
It is plausible, then, that some private litigants are not aware of the
obligation or, for that matter, the option of complaining to the OLSC about
alleged breaches of the obligation.
It was put to the Attorney‑General's Department that the figures
it provided indicate a 'remarkably small amount' of non‑compliance.
In response, the department posited that by engaging with Commonwealth
litigants throughout the process, it prevents the occurrence of breaches and
[T]he complaints are realistically just the tip of the
iceberg in terms of our compliance work. Because we are engaging so early and
so often with agencies in their conduct of litigation—and I gave an example
earlier about some of the forums—it means that we can be engaged throughout
their decision-making process, including suggesting to them that they might
want to think about how they are proposing to conduct the litigation. So I
would say to you that our compliance work includes prevention of further complaints
and that the statistics then are not necessarily representative of the totality
of where amendments might be needed for the conduct of the agencies.
It should be noted that a number of the above examples, which allege
breaches of the obligation, were directly disputed by the government agency
that was the subject of adverse reflections. These responses were published
alongside the submissions or were contained in Hansard transcripts.
Adequacy of oversight by the Office
of Legal Services Coordination
As explained in Chapter 1, the Attorney-General's Department, through the
OLSC, is responsible for administering the Directions.
The existing system of oversight received support from some submitters,
including the Attorney‑General's Department and the Tax Office.
The Department of Human Services also submitted that 'the current system of
review and enforcement...is appropriate and effective'.
The Department of Human Services further noted that as the Directions
are made by the Attorney‑General, the 'OLSC is best‑placed to
interpret the intentions of the Commonwealth's first law officer in respect of
the content of the Directions.'
Similarly, the Law Council of Australia (Law Council) submitted that OLSC 'is
arguably better placed to deal with systemic issues that might arise than the
The Attorney-General's Department rejected claims made in evidence that
it is too passive in its oversight of the obligation.
It argued that the OLSC is 'quite proactive' and 'does not simply wait passively
until a matter has concluded and then review its handling'.
For example, if a Commonwealth agency is seeking legal counsel that costs more
than $5,000 then the Attorney‑General's approval is required. The
department explained that in such cases, the OLSC gets involved early. The OLSC
...be part of that conversation to say, 'What do you need this
particular counsel for, how many counsel and what's the particular purpose?'
Part of that conversation is: 'Have you got the right, and only the right,
amount of resources devoted to this particular exercise?' It's not just that we
wait until the other end of the exercise, where there's a complaint about a
potential breach of the model litigant obligation but that we're very much
involved at the outset of litigation as well.
However, other submitters questioned the adequacy of oversight
arrangements. For instance, the Lawyers Alliance referred to alleged breaches
of the obligation and argued that '[t]here is a clear need for greater
oversight of government agencies' implementation of model litigant obligations'.
Mr Charles Powers argued that some government agencies have shown a
'willingness to bend the existing rules to minimise scrutiny', and supported
clear reporting requirements.
Civil Liberties Australia argued that the obligation should be actively
policed, and that this has not occurred for more than a decade.
It stated that the 'OLSC adopted a hands-off approach, by which only self‑reporting
by a government entity of a breach was required. Naturally, the number of
reported breaches dwindled.'
Civil Liberties Australia also argued that the Attorney‑General's
Department 'takes an extraordinarily passive' approach to the education of
government agencies about the obligation.
Moreover, at the time of its submission, Civil Liberties Australia said
that it appears that the Attorney‑General's Department does not publish
reported breaches of the obligation in accordance with its own guidance note,
arguing that this 'would appear to illustrate a contempt' with which the
Attorney‑General's Department treats the model litigant obligation.
It supported an audit of Commonwealth compliance with the obligation, while
suggesting that AGD should not be responsible for it because '[w]e don't
believe they can be trusted on this'.
In responding to Civil Liberties Australia's submission, the Attorney‑General's
The department does publish statistical information from
agency compliance assessments undertaken in accordance with the Directions. This
information has been published annually in the department's annual reports
and/or the department's website. We acknowledge that the Guidance Note on our
website requires updating and will seek [to] make the required amendments.
The proposed role of the courts
The committee heard mixed evidence on the merit of the bill's provisions
regarding court powers. One key issue was whether courts already have
sufficient powers to maintain standards of conduct in litigation, including by
enforcing the common law obligation and court rules, and whether this renders
the bill unnecessary.
Mr Silverbrook, who supported the bill, suggested that existing
provisions governing compliance with the Directions provide 'loopholes' to
Commonwealth litigants. He noted that under existing subsections 55ZG(2) and 55ZG(3)
of the Judiciary Act, the model litigant obligations 'are not enforceable and
cannot be raised in court, except by the Commonwealth Government itself.'
Dr Morrison RFD SC of the Lawyers Alliance discussed possible
limitations of relying on existing enforcement options:
If the behaviour is behaviour which falls short of a breach
of court rules, or court orders, but which is nonetheless designed to delay or
make more difficult the tasks of bringing a case to fruition, then it may be
that the new rules will then have some useful affect in permitting a court to
enforce that which previously the court wouldn't wish to become involved in, so
I see an advantage in that respect.
The Queensland Law Society supported the concept of enforceable model
litigant obligations, including the court having discretion to stay proceedings
or make orders if a Commonwealth litigant contravenes the obligation. However,
it argued that '[w]e do not consider that it is appropriate to seek an order of
the court based on a "likely" contravention of a provision', which is
currently allowed for under the bill, as 'it creates a significant degree of
The Queensland Law Society proposed an amendment to this effect.
The Rule of Law Institute of Australia (Rule of Law Institute) supported
the bill's proposed enforcement of the model litigant obligation.
Mr Malcolm Stewart, the Institute's Vice‑Chairman, posited that currently,
...has a lot of powers under the Federal Court rules, and the
act, to stay proceedings for various reasons. It does not have the power to
stay the proceedings for breach of the model litigant obligations. What this
bill does is introduce the ability to stay.
In practice, Mr Stewart argued that 'Federal Court judges would be loath
to grant a stay', given other requirements to conduct litigation speedily and
...I think it is only in extreme circumstances that a court
would grant a stay. At least initially, it is much more likely to try and
redress in some specific way the breach of the obligations of the model
litigant rules should the bill be passed. Only after that, if that wasn't
remedied at that point, would you expect the court to grant a stay in these
Another submitter, whose name was withheld, also noted that courts are
reluctant to stay proceedings, observing 'the courts' drive for procedural
efficiency'. However, this submitter suggested that this reluctance would
negatively affect the bill's intended operation.
A number of submitters told the committee that a court is already able
to stay proceedings and make orders under the current system.
The Legal Services Commission of South Australia referred to the court's powers
in enforcing the common law obligation, which exists in addition to the
obligation in the Directions:
The Common Law has a long-established principle that the
Crown must comply with certain standards in the way it conducts litigation.
Where those standards are not adhered to, courts may look to remedies such as
granting adjournments, interlocutory proceedings, costs orders or allowing
additional witnesses to be called.
Both the Commonwealth Ombudsman and the Law Council referred to examples
in which courts have exercised their powers, or considered the potential to
exercise them, with respect to the common law obligation.
The Law Council's examples included courts making a special cost order for
breaching the obligation, potentially staying proceedings until a breach of the
duty is remedied, and taking into account a breach of the obligation in
exercising judicial discretion.
Moreover, the Law Council submitted that 'the model litigant principles
set out in the Legal Services Directions are not in substance different to the
common law duty'. It also referred to a Federal Court judgement in which the
common law obligation was said to be 'broader and more fundamental'.
The Commonwealth Ombudsman similarly submitted that there is 'a
significant overlap between the administrative and common law model litigant
obligation'. It referred to the Federal Court decision of ASIC v Rich,
which held that the obligation in the Directions can be used as an aid to
understanding the content of the common law obligation.
In addition to the common law obligation, the Attorney‑General's
Department submitted that 'the courts use their inherent jurisdiction and civil
procedure laws to oversee the Commonwealth's actions as a litigant.' It gave
the example of subsections 37M and 37N of the Federal Court of Australia
Act 1976, which oblige litigants to ensure that litigation is conducted in
a proper and efficient way.
The Law Council also observed that a court would also have regard to the
Federal Court Rules 2011 when considering whether a contravention of the
obligation would cause, or would likely cause, the administration of justice to
Given these existing powers, the Law Council argued that proposed
sections 55ZGA and 55ZGB of the Judiciary Act in the bill would not, 'as a
matter of substance, provide any additional power to a Court that does not
already exist by reason of the common law and the Rules of the Court'.
The Law Council further stated:
In fact, it might be argued that the proposed statutory
provisions detract from that common law power by conditioning the grant of any
relief to circumstances where a complaint has been made to the Ombudsman.
A similar but distinct point was made by the Tax Office, which suggested
that the bill could be considered a fetter on the court's inherent jurisdiction
if it requires the court to consider the investigation and decision of the
Ombudsman prior to making an order.
The Tax Office also expressed concern that the bill would conflate 'the
determination of whether conduct is a breach of the model litigant obligations
with the determination of the substantive issue' before the court.
It told the committee that courts can already take action regarding any matter
which goes to the substantive matter before the court, including breaches of
[I]f something has been done that's unlawful or a breach of
the rules, then you would raise it with the court because, if it's relevant to
the substantive matter, you don't need the process of going to the Ombudsman.
You would raise it with the court because it's relevant to the determination of
The Tax Office further illustrated this point with an example:
[T]he small-business person says, 'Oh, I want a deduction for
whatever.' And surely whether the Commonwealth has been in breach of the model
litigant obligations is not relevant to determining whether they get the
deduction. If the Commonwealth is in breach of a model litigant obligation then
that doesn't mean that they get the deduction. It may be relevant in the
proceedings, in the production of documents, or in some other procedural aspect
that's relevant to the proceedings. If that's the case, the court already has
In a similar vein, the Attorney-General's Department suggested that
courts can handle matters that go to the substance of the litigation, while
other conduct can be handled by the current administrative process:
We would argue that, to the extent that anything is raised
before the court which goes to the substance of the way that the litigation is
being conducted, the court has sufficient inherent jurisdiction to deal with
it. To the extent that it's outside of the way the conduct is being managed for
the purposes of the current dispute—and it goes to something about the conduct
of the Commonwealth, which does not substantively impact on the litigation—then
the current framework, in terms of a complaint to the Office of Legal Services
Coordination and engagement with the relevant agency, is sufficient to address
Applying the proposed powers to tribunals
The Directions provide that the model litigant obligation applies to
litigation, including before courts, tribunals, inquiries, and in arbitration
or other alternative dispute resolution processes.
However, the bill only refers to courts; it does not mention tribunals.
Some submitters observed that it is not clear whether the bill, as
currently drafted, applies to tribunals.
Others appeared to presume that it either does
or does not
At one of the committee's hearings, Senator Leyonhjelm provided some
context as to why the bill only refers to courts and not tribunals:
My thinking was that the Commonwealth party to litigation
would never know when a case was going to go all the way through to the Federal
Court, even having been dealt with by the AAT before that, and therefore that
knowledge that their behaviour, their compliance with model litigant rules,
might be raised in a court would influence the way they dealt with a case up to
The Department of Human Services highlighted possible issues with the
bill applying to tribunals. First, it noted that it is not clear whether the
current bill would apply to tribunals:
[T]he Bill does not define the term "court" as used
in Items 4 and 5 of the Bill. Nor does the Bill seek to amend the (relatively
limited) application of the Judiciary Act, relating expressly to the exercise
of judicial power of the Commonwealth in the High Court of Australia and the
Federal Court of Australia.
Moreover, the department said that applying sanctions for non‑compliance,
as proposed by the bill, is unlikely to accord with the no‑cost
jurisdictions of the AAT 1 and AAT 2:
[T]he sanctions that a court may apply in Item 4 (proposed
section 55ZGB(2) of the Bill) where the court is satisfied that the Model
Litigant Obligations have been, or are likely to be, contravened, may primarily
be costs orders against the Commonwealth litigant (see paragraph 17 of the
Explanatory Memorandum). Such sanctions do not sit easily, if at all, with the
"costs-free" jurisdiction of the AAT 1 and the AAT 2.
Nevertheless, several witnesses expressed at least some level of support
for the provisions of the bill applying to tribunals as well as courts.
This included Self‑Employed Australia, which supported including the AAT
in the bill as it is often the '"first port of call" for an
independent review of the ATO's actions against a small businessperson'.
While both the Tax Office and the Attorney‑General's Department
generally opposed the bill, they each also expressed concern about the bill
applying only to courts and not tribunals.
The Tax Office cautioned that this may lead to taxpayers commencing
proceedings in the Federal Court, rather than the AAT, because they perceive that
would provide an advantage:
With regards to taxation and superannuation litigation, this
may create access to justice and equity issues as taxpayers of more substantial
means who can afford to litigate within the Federal Court could in effect
achieve a different outcome than if they had undertaken the litigation within
the Administrative Appeals Tribunal.
The Attorney‑General's Department suggested that limiting the
bill's application to courts and excluding tribunals would 'fragment its
operation, cause inconsistencies and not be in line with the intended
objectives of the model litigant obligation'.
The proposed role of the Commonwealth Ombudsman
The bill's proposed role for the Ombudsman received support from some
submitters. For example, the Rule of Law Institute highlighted that the
Productivity Commission recommended establishing a formal avenue of complaint
to a government ombudsman.
Civil Liberties Australia stated that the bill would ensure that 'a proper
authority, the Commonwealth Ombudsman, would take the [model litigant
obligation] on the government seriously, and would report annually'.
Cleary Hoare Solicitors, which supported the bill, submitted that the
Ombudsman should be able to make recommendations to the court regarding
appropriate sanctions, not merely determine whether the obligation was
It also observed that elements of the obligation apply to conduct prior to the
commencement of court proceedings. If the obligation can only be enforced by a
court, then this:
...requires the Commonwealth subject to commence proceedings
despite a potential contravention of [the model litigant obligation]. It surely
cannot be the intention of the Bill to require this.
We recommend a suitable alternative to empower the Ombudsman
and/or [the Inspector‑General of Taxation] to suspend any action by the
Commonwealth entity in respect of the dispute until the contravention has been
investigated and remedied.
The Law Council's view was different; it suggested that while the
Ombudsman should have some administrative role, a court is better placed to
consider and adjudicate on alleged breaches of the obligation in the particular
circumstances of a matter before the court.
In a general sense, a breach of those elements of the model
litigant obligations that are of an administrative nature are appropriately
matters for administrative complaint and review mechanisms. On the other hand,
those elements that relate to the way litigation is to be conducted in court
are matters for the court in the exercise of its inherent powers to manage the
conduct of judicial proceedings and to exercise supervision over the adherence
by legal practitioners with their ethical and other professional obligations as
legal practitioners and officers of the court.
The Attorney‑General's Department argued that the bill is
unnecessary, in part because it is already possible to complain to the
Ombudsman about alleged breaches of the obligation.
As noted in Chapter 1, the Ombudsman submitted that it is currently able to
consider complaints regarding breaches of the obligation.
However, the Ombudsman generally refers any complaints to the OLSC,
and does not typically involve itself in matters that are before a court.
The Ombudsman further noted that in order to effectively perform the
function proposed in the bill, it would need to build the skills of its office
and engage specially trained investigation officers who understand litigation. This
would require appropriate resources.
However, the volume of resources needed would depend on the quantity and
complexity of complaints received regarding the obligation.
The Ombudsman also discussed the powers available to the office when conducting
Possible procedural issues with an
Some submitters raised questions about how investigations by the
Ombudsman would relate to court processes if the bill were passed.
The Ombudsman advised that it is not clear how the proposed scheme would
interact with existing subsections 6(2) and 6(3) of the Ombudsman Act. In very
general terms, these provisions limit (but do not eliminate) the Ombudsman's
ability to investigate matters that are before a court, that may go before a
court, or that have been before a court.
The Ombudsman posited that these provisions 'recognise the expertise and
capacity of a Court to manage, resolve and enforce matters that fall within its
jurisdiction (including the common law model litigant obligation)'. It also
stated that subsection 6(2) avoids duplication of oversight of an agency by the
Ombudsman and a court.
Some inquiry participants also expressed concerns about inadvertent
interference with court procedures. The Legal Services Commission of South
Australia submitted that '[i]t is easy to imagine that any investigation of an
active court case would quickly fall foul of the laws of evidence and
Similarly, the Ombudsman stated that '[i]n order to appropriately investigate a
complaint it may also be necessary for my Office to speak to lawyers and
witnesses involved in the case. That could inadvertently interfere with the
conduct of the proceedings.'
The Law Council suggested that an Ombudsman investigation could
interfere with the administration of justice by a court:
For example, there is an implied undertaking by a party to
litigation to only use material obtained through compulsory judicial processes
for the purposes of that litigation; that is, without a release from that
undertaking from the Court, use of that material in an Ombudsman enquiry would
likely amount to an abuse of process.
The Law Council also raised the possibility that the Ombudsman's report
'might prejudice the Commonwealth's substantive position in the litigation by
revealing, for example, matters of legitimate litigation strategy that the
Commonwealth should be entitled to keep confidential'.
The Attorney‑General's Department highlighted section 11A of the
Ombudsman Act, which enables the Federal Court to make a determination on how
the Ombudsman conducted or is conducting its investigation. It observed that,
as the bill would allow the Ombudsman to investigate conduct before a court, it
'could result in one part of the Federal Court directly or indirectly
commenting on proceedings in another part of the Federal Court'.
Finally, regarding the scope of the Ombudsman's investigations, both the
Tax Office and the Attorney‑General's Department submitted that the bill
is not clear on whether the Ombudsman would have jurisdiction to investigate
complaints about a Commonwealth litigant's conduct in state or territory court
Interaction between the Ombudsman
and the court
A further issue related to questions about the status that an
investigation by the Ombudsman would hold before a court. For instance, the
Attorney‑General's Department stated that there is a 'lack of clarity'
regarding what would happen when the Ombudsman reports to the court:
The court has the ability under the bill to make an order,
but what if the court says, 'Okay, we need more information from the
Ombudsman?' What if the court doesn't agree with the Ombudsman's findings?
The department also made further observations:
We see the potential there for a matter to be raised with a
court and referred off to the Ombudsman for investigation. But then it also
remains within the court's jurisdiction, as we understand it, to make a
decision without waiting for the Ombudsman's outcome. Alternatively, they might
actually await a report from the Ombudsman. There is a potential there for the
Ombudsman to conclude that it either is or isn't a breach of the model litigant
obligation and for a court to conclude otherwise. How those two can be
reconciled is actually a little unclear for us.
In a similar vein, the Tax Office asked:
...does the Court need to consider the investigation and
decision made by the Commonwealth Ombudsman prior to making an order? If this
is the case, then it could be considered a fetter on the court’s inherent
jurisdiction for it to have to consider the decision of an administrative body
such as the Ombudsman. If this is not the case, then the obvious question
remains – what is the utility and value to be gained by the Commonwealth
Ombudsman becoming involved in investigating contraventions of model litigant
One submitter told the committee that the proposed court powers are too
broad because they would enable courts to make orders even where the Ombudsman
did not find that the Commonwealth breached the obligation.
The Ombudsman observed that only a court, not the Ombudsman, could
enforce the obligation. As a result, the referral of complaints to the
Ombudsman may 'remove a litigant's recourse to enforce the obligation through
court processes and replace it with an administrative complaint process
conducted by [the Ombudsman's Office].'
Alternatively, if this is not the case, then there is a 'very real
possibility' that the Ombudsman and the court would come to different views
about an alleged breach, particularly since the obligation can be complex and 'pulls
in different directions'. The Ombudsman said that in these cases, litigants
would be 'obliged to adhere to any orders made by the court and it is unclear
what status the investigation by [the Ombudsman] would have'.
The Ombudsman raised the possibility that this might result in his office, the
court, and lawyers expending resources on an investigation that doesn't have
Notwithstanding these points, some submitters supported employing the
Ombudsman as a means of resolving compliance matters quickly and outside the
The Queensland Law Society submitted that a litigant should not be
required to make a complaint to the Ombudsman in order to be able to raise in
court a Commonwealth litigant's compliance with the obligation.
As Mr Taylor of the Queensland Law Society stated:
The complaint process should run parallel to the litigation,
be dealt with at the same time and be dealt with basically on the side by the
Ombudsman, who can then make their findings known to the parties. If the
parties wish to bring those findings to the court, the court can make the
decision then as to whether or not a penalty should be applied, whether that be
a monetary penalty or in fact a stay of proceedings or some other decision.
The Lawyers Alliance made a similar point. It recommended that the
Ombudsman's oversight 'be available in real time, offering the prospect of
enforcing model litigant obligations while the dispute is still ongoing.'
Dr Morrison RFD SC of the Lawyers Alliance stated that matters should
go to the Ombudsman first 'in 99.9 per cent of cases', rather than a
I think the primary focus should be on the Ombudsman remedy,
because that is the quickest and most practical remedy and one which doesn't
drag a judge away from the judge's primary function of determining the facts in
the case and applying the law...
However, Dr Morrison RFD SC noted that there may be some very
rare cases in which a judge would need to be involved, such as 'upon clear
findings by the Ombudsman that something improper had occurred, and then the
judge may need to take that into account in assessing what, if any, procedural
remedies were required'.
However, he also noted that:
I wouldn't like to see a situation where the judge is the
first port of call, because our judges do their very best to keep focused upon
what's in the particular case and where the evidence leads them—and that's
properly so, in the interests of justice.
One submitter expressed greater concern on this point, observing that
the bill requires the trial judge to also hear an application to stay
proceedings. They pointed to the risk of apprehended bias:
A finding by the trial judge that the Commonwealth has
breached their model litigant obligations may mean that the trial judge is
perceived as "biased". This would have further appellate
implications. This should be amended.
Interaction between the Ombudsman
and the Inspector-General of Taxation
The Inspector-General of Taxation drew attention to possible issues
relating to the jurisdictional boundary between the Commonwealth Ombudsman and
The Inspector‑General is responsible for the handling of all
complaints regarding the administrative actions of the Tax Office and the Tax
The Ombudsman is responsible for complaints relating to administration in other
areas of government. On this issue, the Inspector‑General submitted:
If the Commonwealth Ombudsman was to be the sole repository
of complaints on the [model litigant obligation], as is currently provided for
in the bill, it would require both of our offices to expend time and effort to
determine the parameters of our respective jurisdictions, transfer parts of
complaints and be restricted in sharing information or findings due to the
secrecy obligations set out in our respective legislation. Such an outcome
would likely delay resolution of complaints investigations, increase costs for
all parties and potentially hamper the efficient administration of justice.
Accordingly, we believe that if the bill was to be passed,
consequential amendments should be made to the Inspector-General of Taxation
Act 2003 to incorporate any powers of the Ombudsman to investigate [model
litigant obligation] matters in relation to the actions of the [Tax Office] and
the [Tax Practitioners Board].
When invited to comment on this, the Ombudsman, Mr Manthorpe, told the
committee that he agrees with the Inspector‑General's proposition that:
...if [the Office of the Commonwealth Ombudsman] had the power
to look at whether the model litigant provisions had been appropriately dealt
with in a tax matter, but [the Inspector‑General of Taxation] still had
complaint‑handling powers about tax matters, which he currently does,
then that could get messy. It would be better to have both things sitting with
him with respect to tax matters.
However, the Ombudsman also acknowledged that jurisdictional issues
sometimes arise in the current system, for example, a matter may touch on tax
matters as well as veterans' entitlement matters. The Ombudsman's office is
'accustomed to working with that sort of ambiguity with all the other
Possible increases to costs and delays
As outlined in Chapter 2, the government's response to the Productivity
Commission's report stated that compliance with the obligation is a matter
between the Attorney‑General and the relevant Commonwealth agency or
department. Any other approach, according to the government response, 'could
give rise to technical arguments and result in additional costs and delay in
litigation involving the Commonwealth'.
The committee heard further evidence on this issue during its inquiry.
As discussed above, the Tax Office expressed concern that the bill would
conflate the substantive matter before a court with determinations on whether
the obligation has been breached. It stated that this would 'make the whole
process more costly, more delayed and more uncertain.'
The Tax Office expanded on this point by way of example, suggesting that:
...if you went to the court and said, 'Look, there's a breach
of a model litigant. We want this investigated,' you would go to the Ombudsman.
You would then make your application to the Federal Court—breach of model
litigant. Meanwhile, you get a stay. The tax issue is put to one side, and the
court is then to determine whether there's been a breach of the model litigant
[obligation]. Assuming that it's not relevant to the determination of the
substantive issue, you've got that cost and delay in trying to determine
whether there's been a breach of the model litigant obligation. Meanwhile,
there's the costs of the taxpayer...having to prove that there was a breach of
the model litigant [obligation], and the court then having to determine whether
that's the case, then giving procedural fairness, obviously, to the
commissioner or any other Commonwealth agency, to answer that. And if one
doesn't agree, they go on appeal. Meanwhile, the tax dispute is still left to
The Attorney‑General's Department suggested that even though there
is no fee to apply to the Ombudsman, 'there may well be a cost in having legal
representatives or, indeed, just a cost in preparing a submission to make to
Although a court may not be required to wait for the Ombudsman to
conclude its investigation, the Attorney‑General's Department stated that
'if you're opening up another avenue for the Ombudsman to investigate, the
court would very likely defer until such time as the investigation by the
Ombudsman is complete'.
The department also noted there is a prospect for appeals to be made in
response to a court order relating to the obligation.
The Legal Services Commission of South Australia submitted that Ombudsman
investigations may take some time, thereby delaying the matter:
Investigations by an Ombudsman necessarily have their own
formalities and procedures and have the potential to delay any court matter for
a considerable time causing further loss to the parties involved.
The Ombudsman submitted that the bill effectively places a 'soft time
limit' of 60 days on Ombudsman investigations.
It explained that previous investigations concerning the obligation have
extended beyond 60 days, but it depends on the complexity of the matter.
Some investigations may be straightforward but others might be quite onerous on
both the Ombudsman and the Commonwealth litigant, noting that the Ombudsman
arrives at each complaint without prior knowledge of the issue.
The Ombudsman explained why some of these matters can be complex:
Although on their face the model litigant provisions are a
reasonably plain English document about limiting the scope of legal proceedings
where possible and so on and so forth, in any given case the set of facts that
give rise to the Commonwealth taking one view and the other person in the
litigation taking another view might require quite a lot of digging into the
history of the case, digging into the case law and digging into the policy
underpinnings of what it is that the relevant department or agency is arguing
versus the individual and so on.
The Ombudsman further noted that, in addition to the possibly burdensome
investigation, to ensure procedural fairness both sides would likely be given
an opportunity to have a say on the view being formed by the Ombudsman.
Some submitters raised concerns that litigants may seek to raise matters
relating to the obligation in order to intentionally delay the court's
proceedings, particularly where delay is to their advantage. For instance, the
Attorney‑General's Department highlighted that the bill does not provide
a clear basis for a court to assess a complaint at the time of granting the
Litigants could be encouraged to make a complaint with the
intention of extending proceedings, for example, in extradition, immigration or
taxation disputes. Where a complaint is unfounded, weak, or vexatious, the Bill
would unnecessarily place additional pressure on the courts.
The Law Council raised the possibility that a private litigant might
seek a stay of proceedings as a strategy to, for example, 'distract attention
by the Commonwealth and its lawyers from the conduct of the litigation'.
The Department of Home Affairs posited that the bill likely incentivises
parties to proceedings to allege non‑compliance with the obligation 'in
order to further delay the resolution of their proceedings'. If this risk is
realised then there may be further incentive for litigants in migration and
citizenship cases to:
...commence judicial review proceedings, which in turn would
allow them to remain in Australia for the period of time in which it takes for
their proceedings to be resolved.
On a similar point, the Tax Office suggested that the bill would 'allow
egregious and vexatious taxpayers to side-step the substantive issues within
the litigation and create delays by raising technical arguments regarding
alleged non‑compliance' with the obligation.
Indeed, its representatives told the committee that the use of interlocutory
procedures to delay litigation is increasingly common in certain litigation,
particularly with 'egregious taxpayers', and that this 'adds to the cost for
the Commonwealth and makes it much more difficult for us to run litigation'.
The Department of Home Affairs submitted that any additional delays are
likely to increase costs for all parties to the proceedings.
Moreover, the Attorney‑General's Department argued that any significant
additional workload for the courts would introduce delay for all matters and 'require
an assessment of associated resourcing requirements as against other government
However, the committee also heard evidence indicating that the bill is
unlikely to cause substantial delays in proceedings. Mr Stewart of the Rule
of Law Institute was asked about the risk of delays caused by the court needing
to consider these matters. He stated that:
...if the court was of the view that the process was being
abused then, for the reasons and the sections that I have just referred to,
which are 37N and 37M of the Federal Court Australia Act, the judge is
required, as are the parties, as are their lawyers, to conduct the proceedings
speedily, efficiently and with as little cost as possible. So I don't see that
as an issue.
In its submission, the Rule of Law Institute advanced that any costs or
delays 'are likely to be off set in an early resolution of litigation, which is
the aim of the model litigant rules.' It further argued that, while it disputes
the risk of costs and delays, 'there is always a price for transparency, credibility
In addition, some inquiry participants suggested that the issue of costs
and delays could be partially addressed by amendments to the bill (discussed
above) that would separate an Ombudsman investigation from the courts. As Mr
Taylor, President of the Queensland Law Society, stated when explaining these
The complaint process—while the Ombudsman has a role to
play—should be dealt with at the same time as the litigation is proceeding. The
complaint process itself should not be able to be utilised by a vexatious
litigant—I think the term's been used before—or by having unmeritorious
complaints to otherwise interfere with the conduct of the primary litigation.
The complaint process should run parallel to the litigation, be dealt with at
the same time and be dealt with basically on the side by the Ombudsman, who can
then make their findings known to the parties.
Issues relating to lawyers
Civil Liberties Australia stated that the Attorney‑General's
Department is responsible for educating public servants about the obligation,
but in its view it had not done so satisfactorily.
The President of Civil Liberties Australia, Dr Kristine Klugman,
argued that 'since the outsourcing of legal services the problem has got worse,
because, as you say, those lawyers want to win at all costs.'
Her colleague, Mr Rowlings, explained further:
The government operates on a win-at-all-costs basis. That is
exactly what it does. It employs commercial lawyers whose attitude is that. If
a department didn't have that attitude when it went to a commercial operation,
which it did roughly 10 years ago, with outside lawyers that culture was
imported into the Commonwealth government, and that's where [the] problem
However, the Tax Office stated that it provides a copy of the obligation
in every brief to an external firm, draws their attention to it orally and in
writing, and the obligation is part of the agreement between that firm and the
Indeed, paragraph 6.2 of the Directions requires the following:
Briefs to counsel in matters covered by the model litigant
policy are to enclose a copy of the Directions on The Commonwealth’s Obligation
to Act as a Model Litigant, at Appendix B, and instruct counsel to comply with
Some submitters also raised the risk that certain provisions of the bill
may expose lawyers to the risk of personal sanction for breaches of the
The Department of Human Services expressed concern that under the bill:
...even where the Commonwealth litigant (or any relevant
individual) has acted in good faith and honestly believing that their conduct
complied with the Model Litigant Obligations, they may still be subject to
civil liability or criminal prosecution in respect of a technical or inadvertent
The department posited that, as a result, the bill may make Commonwealth
litigants less likely to litigate a 'novel but arguable point'.
Similarly, the Tax Office submitted the bill may expose officers to personal
sanctions for contraventions of the obligation, which could 'indirectly lead to
a culture of risk aversion in decision making'. It further stated that the bill
may make legal firms reluctant to act for the Tax Office, 'which in turn
impacts the long-term quality and efficiency of the ATO’s legal practice and
the outcomes the ATO can achieve'.
The Law Council outlined the standards and regulations that already
apply to lawyers acting for the Commonwealth, particularly Attorney‑General's
lawyers under section 55E of the Judiciary Act. It submitted that these
arrangements should be maintained, and that they should not be brought 'into
the scope of investigation and formulation of recommendations by the
...complaints about Commonwealth litigant legal practitioners
in relation to contraventions of the model litigant obligation, which raise
allegations of unsatisfactory professional conduct or professional misconduct,
should continue to be dealt with by the relevant state or territory legal
profession complaints handling authority, rather than by the Commonwealth
The Rule of Law Institute took issue with this argument. Its Vice‑Chairman,
Mr Stewart, advanced that while professional misconduct proceedings may be
We need to deal with these things during the current court
process. If there is a court process going on, where a litigant gets a whiff
that that might be some breach in the model litigant rules, it needs to be
dealt with on the spot. It can't be dealt with two or three years later, after
litigation has finished and appeals have been exhausted. Part of what is good
about this bill is that it deals with it during the course of the litigation.
This section briefly outlines other issues that were raised in evidence
to the committee.
One submitter, whose name was withheld, commended the intention and
purpose of the bill but cautioned that it may cause 'a number of unintended
consequences which may detract from the enforcement of the obligations.' The
submitter proposed an alternative model of enforcing the obligation, in which
parties would not be required to make a complaint to the Ombudsman. Rather,
they could bring an application before an independent judge (sitting in the
same court as the trial judge), who could make declarations about the
Commonwealth's conduct and make any orders necessary to ensure the Commonwealth
complies with the obligation.
Separately, the submission from the Attorney‑General's Department
opposed the bill.
One risk raised by the department was that the bill could lead to an 'overly
technical' approach to the model litigant obligation, either through
interpretation or amendments to the Directions:
Transforming the obligation into a matter to be determined
and enforced by courts could encourage a re-casting of the obligation to be
prescriptive and technical, rather than principles-based, to provide certainty
in interpretation where it may affect substantive proceedings.
The department explained that, currently, the obligation is 'flexible
and fluid to allow it to be adapted to the specific circumstances of a matter'.
It supported a principles‑based approach over a technical one because 'it
encourages a reflective approach by entities and their legal representatives
rather than simply seeking to comply with technical requirements'.
The Attorney‑General's Department further submitted that the bill
is not merely unnecessary; it 'would, in fact, cause harm'. The departmental
representative suggested the bill would 'hold out to people the prospect that
they will get the Ombudsman and the court addressing their underlying sense of
However, of those who allege breaches of the obligation, a 'very small subset'
has their allegation confirmed, and so:
...there would be people who would be very sincerely believing
that there's been a model litigant breach in their case. They'd raise that
concern. The court can stay their matter. The Ombudsman can look into it. We
don't think it's necessarily going to actually change their position at all.
In cases where this process doesn't change the person's position, the
departmental representative suggested it would 'be difficult for them,
emotionally and otherwise'.
Finally, the Attorney‑General's Department put it to the committee
that litigants already have a number of mechanisms available to them if they
wish to raise concerns about a Commonwealth litigant's conduct. This includes
raising their concerns with the relevant agency, complaining to the Ombudsman,
or seeking relief through administrative review.
In addition, the Tax Office drew attention to its alternative dispute
resolution work, which includes 'a number of alternative dispute resolution
services tailored to the small business market and the nature and complexity of
Regarding alternatives to the bill, both the Attorney‑General's
Department and the Department of Home Affairs referred to the Attorney‑General's
Department's Secretary's Review of Commonwealth Legal Services,
published in November 2017.
This review made recommendations about how the Commonwealth conducts legal work,
and the Attorney‑General's Department said that the review is currently with
government for consideration. The Attorney‑General's Department explained
...[s]everal of those recommendations emphasise improved
understanding and consistent training to government lawyers regarding their
unique role, enhancing agency compliance with the Directions and strengthening
the role of OLSC.
The committee strongly supports the principle of 'fair play' that
underpins the Commonwealth's obligation to act as a model litigant.
When engaged in litigation, the Commonwealth often has access to
extensive resources and legal expertise, as well as an established reputation
before the courts. It is incumbent on Commonwealth litigants to act fairly and
in the public interest, rather than seek to 'win at all costs'. However, the
Commonwealth should also act firmly and properly to protect its interests.
Given the importance of the Commonwealth's compliance with the
obligation, the committee commends the underlying intent of the bill. The
committee considers the bill is generally consistent with the Productivity
Commission's recommendation, even allowing that it goes beyond what would be
necessary to satisfy the recommendation.
Nonetheless, the committee considers that the specific provisions of the
bill may not be the most appropriate or effective way to increase and ensure
compliance with the obligation. The committee is conscious of the risk of
unintended consequences, particularly noting that some submitters expressed
uncertainty about how the bill would operate on certain points.
The committee also does not wish to unduly dismiss the risk of increases
to costs and delays in litigation which, if realised, could affect litigants,
the Commonwealth, the courts, the Ombudsman, and potentially others. Further,
it appears that elements of what the bill proposes—including the ability of
courts to make orders regarding breaches of the obligation and the ability of
the Ombudsman to investigate complaints alleging breaches of the obligation—may
already be in place.
There is merit in the bill and a need for action that would ensure
compliance with the obligation. However, further work is required to address
concerns about the current version of the bill that were raised in this report
and in evidence to the inquiry.
While the committee recognises that the bill has merit and that action
needs to be taken to ensure compliance with the model litigant obligation, the
committee recommends that the Senate not pass the bill in its current form.
The committee encourages the government to consider what action it could
take to address the concerns raised during this inquiry about the
Commonwealth's compliance with the obligation. The committee also encourages
the Senate to give close consideration to any future bills, or amended bills,
that would ensure Commonwealth litigants comply with the obligation without
causing unintended consequences.
The committee expresses its view on some elements of the bill below. It
also refers to certain steps that the government may wish to consider taking in
an effort to ensure that the Commonwealth complies with the obligation.
The extent of non‑compliance
with the obligation
The committee received mixed evidence regarding the extent of non‑compliance
with the obligation. On one hand, the committee notes data provided by the
Attorney‑General's Department and other government agencies indicating
that breaches of the obligation are only alleged in a very small proportion of
Commonwealth legal matters—and the number of confirmed breaches is even smaller.
It further notes evidence suggesting that most non‑compliance issues are
generally technical in nature and are quickly addressed.
However, the committee also heard about the difficulties experienced by
people and businesses allegedly due to breaches of the obligation. These cases
are concerning. Even allowing that the Commonwealth complies with the
obligation in the vast majority of cases, the cases of alleged non‑compliance
brought to the committee's attention underline the importance of the
Commonwealth's obligation to act as a model litigant.
In the committee's view, the weight of evidence indicates that it is
possible that there are instances of non‑compliance which have not been
recorded in official data.
The committee recommends that the government initiate action to fully ascertain
the nature and extent of the problem of non‑compliance with the model
litigant obligation, such as an independent audit of compliance.
Knowledge and understanding of the
It is positive that paragraph 6.2 of the Directions requires briefs to
counsel to instruct counsel to comply with the obligation. However, there are
questions over whether the parties engaged in litigation with the Commonwealth understand
the nature, protections and limits of the obligation. Such understanding is
important in ensuring that the Commonwealth is held to account.
The committee encourages government to consider how it could ensure that
all parties in litigation with the Commonwealth are made aware of the existence
and content of the model litigant obligation, including action a litigant could
take if they feel that the Commonwealth has breached the obligation.
The role of courts and tribunals
The committee considers that courts should play a role in enforcing the proper
conduct required by the model litigant obligation. Such enforcement could incentivise
compliance and provide an avenue of redress if the obligation is breached. It
would likely be possible for this redress to have effect while the proceedings
are still underway.
The committee heard evidence in favour of enabling tribunals, alongside
courts, to enforce the obligation. While there were some concerns raised about
this proposal, the weight of evidence indicated that it may be beneficial to
adopt a consistent approach that includes tribunals in any proposal relating to
enforcement of the obligation by courts.
The committee recommends that the government include tribunals (such as
the Administrative Appeals Tribunal), as well as courts, in any proposed
legislation relating to the enforcement of the model litigant obligation by
The role of the Ombudsman
The committee considers that the Ombudsman should have a role in
investigating alleged breaches of the obligation. The committee is conscious of
evidence indicating that the bill's proposed role for the Ombudsman may be
onerous for the Ombudsman's office. If legislative change increases the
Ombudsman's responsibilities, it is important that the Ombudsman be
appropriately resourced to fulfil all its functions.
The committee notes that the Ombudsman indicated that it is already able
to conduct investigations into complaints about non‑compliance. However,
it also understands that the Ombudsman may currently tend to exercise its
discretion not to investigate these complaints, including on the basis that the
matter is before a court, and perhaps refer the matter to the OLSC instead.
The committee notes concerns about the interaction between courts and
the Ombudsman, including potential legal procedural issues caused by the
Ombudsman's investigation. It appears that these may be alleviated, to some
extent, by separating Ombudsman investigations from court processes, as some submitters
A further point of evidence related to the jurisdictional boundary
between the Commonwealth Ombudsman and the Inspector‑General of Taxation.
The committee notes that the current version of the bill provides for all
complaints relating to breaches of the obligation to be within the scope of the
Ombudsman, rather than the Inspector‑General, even where they relate to
tax administration action.
Careful consideration should be given to how best to divide
responsibilities between these two bodies in any future legislative change. The
committee suggests that this consideration use the existing jurisdictional
boundary as a starting point, noting that it appears sensible to divide
responsibilities based on whether or not a matter relates to tax administration
Senator the Hon. Ian
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