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The principles of propriety

Feature Articles

Cite as: September 2014 88 (09) LIJ, p.44

What implications does the Civil Procedure Act 2010 pose for the Crown's model litigant obligations?  

By Brian Mason

The Crown's obligation to conduct litigation while observing the standards of propriety expected from a model litigant is well recognised in Australian law.

The principle stems from Griffith CJ expressing surprise in Melbourne Steamship Co Ltd v Moorehead at the Crown taking a technical point when noting the “old-fashioned traditional, and almost instinctive, standard of fair play to be observed by the Crown in dealing with subjects”.1 Victorian courts have elaborated that this requires the Crown to maintain a standard of fair play and to act reasonably, fairly and in accordance with good conscience when involved in civil litigation.2

To assist the Crown uphold this standard of propriety, the Commonwealth and Victorian governments have both specified how their ministers, officers, departments and agencies should handle claims and conduct litigation.

The Commonwealth’s guidance is set out in an appendix to the Legal Services Directions 2005 (“Commonwealth Guidelines”) issued pursuant to s55ZF of the Judiciary Act 1903 (Cth). A breach of these directions is not actionable despite their status as a legislative instrument.3 Also, only the Commonwealth may raise any failure to comply with these directions as an issue in a proceeding,4 and the constitutional validity of this was recently upheld in Caporale v Deputy Commissioner of Taxation. There, Robertson J accepted that this arrangement does not amount to a privative clause which takes away a court’s jurisdiction, but instead reflects “the limited scope and nature” of the Crown’s obligations under those directions.5

In contrast, the Victorian government’s guidance is contained in the Model Litigant Guidelines (“Victorian Guidelines”) issued in 2004 and updated in 2011. Despite being based on the Commonwealth’s equivalent, these guidelines are not a legislative instrument and at best amount to an expression of the Victorian government’s policy intentions. They were recently supplemented by the “Common Guiding Principles” which, although non-binding, are to inform how the Department of Human Services and the Department of Education and Early Childhood Development respond to civil claims involving child sexual abuse allegations connected with state institutions.

Both the Commonwealth and Victorian Guidelines recognise that the essence of a model litigant involves “act[ing] with complete propriety, fairly and in accordance with the highest professional standards”.6 Among other things, those guidelines require that the Crown:

  • acts fairly and consistently in handling claims and litigation brought against it;
  • deals with claims promptly and without causing unnecessary delay;
  • avoids litigation where possible, and minimises the costs of litigation which cannot be avoided (such as, by not contesting liability if the main dispute is about quantum); and
  • does not take advantage of claimants who lack the resources to litigate legitimate claims.

Several of the Commonwealth and Victorian Guidelines’ requirements also feature in the “overarching obligations” established by the Civil Procedure Act 2010 (Vic) (“the Act”). These obligations, which are designed “to improve standards of conduct in litigation”,7 include:

  • a paramount duty to the court to further the administration of justice (s16);
  • an obligation not to make a claim or response which is frivolous, vexatious, an abuse of process or otherwise lacks a proper basis (s18);
  • an obligation only to take steps necessary to facilitate the resolution or determination of the proceeding, and to cooperate with the parties and court regarding its conduct (ss19 and 20);
  • where a dispute cannot wholly be resolved by agreement, an obligation to narrow the remaining issues in dispute where it is in the interests of justice, and appropriate, to do so (s23); and
  • an obligation to ensure that the legal costs incurred in connection with a proceeding are reasonable and proportionate to the complexity or importance of the issues, and the amount, in dispute (s24).

When an objective evaluation of a legal practitioner or litigant’s conduct reveals that an overarching obligation has been breached, then s29 of the Act gives the Victorian courts a broad power to sanction the relevant person. As the Victorian Court of Appeal recently noted in Yara Australia Pty Ltd v Oswal, “[t]he Act is clearly designed to influence the culture of litigation”, and through this power to impose sanctions “Parliament has given the courts flexible means of distributing the cost burden upon and across those who fail to comply with their overarching obligations”.8 The Court regarded this power as “a valuable tool for improving case management, reducing waste and delay and enhancing the accessibility and proportionality of civil litigation”, and intimated that it should not remain unused because “[j]udicial officers must actively hold the parties to account”.9

Overlap

The requirements of the Commonwealth and Victorian Guidelines on the one hand, and the Act on the other, can be expected to overlap in many proceedings involving the Crown because they both concern the standard of propriety expected from litigants. The Victorian Guidelines allude to this by requiring that they “should be observed in conjunction with the provisions of the [Act]”.10

This overlap was demonstrated in Director of Consumer Affairs Victoria v Scully (No. 2).11 The defendants in that proceeding were unrepresented, and Hargrave J regarded the director’s model litigant obligations in those circumstances as requiring that he “shar[e] a common interest with the Court in co-operating to achieve the correct result”, and it was in the interests of justice that this burden was adequately and reliably discharged.12 It was therefore regarded as “particularly important” the director brought to the Court’s attention those matters which an opposing practitioner was “likely” to raise had the unrepresented parties been represented.13 This included matters potentially adverse to the director’s interests. His Honour then indicated that, “even putting the director’s status as a model litigant to one side”, the director was subject to the Act’s overarching obligations.14 The director’s failure, among other things, to bring to the Court’s attention matters adverse to its case, called into question whether this obligation had been satisfied.15

The unresolved question is whether the Crown’s model litigant obligations may interact with the Act’s requirements to influence their content. This may occur in two ways: by the Act’s requirements converging with a model litigant’s common law obligations, or by the Act operating as a ratchet to increase their onerousness in discrete circumstances.

Convergence

The courts have recognised that the behavioural standards mandated by the Act may converge with those expected from model litigants.

In Perfection Fresh Australia Pty Ltd v Melbourne Market Authority,16 for example, the plaintiffs sought various categories of documents which they claimed were important when determining whether to execute an agreement for lease and lease for the premises allocated to them at the Epping Market. The plaintiffs also claimed those documents would assist them in determining whether to forfeit their existing market allocations and participate in a proposed tender for alternative allocations. They suggested a mediation where the parties would seek to agree the information and documents to which the plaintiffs reasonably required access when making these commercial decisions.

Justice Vickery noted that, “as a model litigant, it is fully expected that the Authority will engage in the mediation with a view to resolving at least this particular issue”.17 His Honour also observed that resolving this issue at that stage of the proceeding would “go a long way to resolving the proceeding overall”, and this would be “consistent with the obligations and duties provided for in the [Act]”.18

Two consequences flow from this convergence which will reduce the significance attached to the Crown’s model litigant status.

First, the doubts about which government agencies engaged in judicial proceedings must act as model litigants will generally fall away. This is because the Act clarifies at s7 that the overarching obligations apply to most litigants engaged in civil proceedings before the courts, and their legal practitioners, representatives and litigation financiers. It also confirms at s4 that it applies to “all civil proceedings” except those brought under specified statutes such as the Confiscation Act 1997 (Vic) or the Coroners Act 2008 (Vic). If a litigant is expected to fulfil the Act’s overarching obligations, then it will derive little benefit from contesting whether it is subject to the converging requirements imposed at common law.

The arid judicial deliberations about whether the Crown’s model litigant obligations encompass councils and statutory corporations – they do19 – or state-owned enterprises – it’s unclear, although this has obliquely been suggested in obiter20 – may therefore be avoided in judicial proceedings. These considerations will, however, remain relevant in disputes submitted to non-judicial bodies for determination where the Act’s overarching obligations do not apply.21

Second, the jurisprudence regarding the model litigant obligations’ content may assist the courts in determining the behavioural standards the overarching obligations establish. This is because the task of statutory interpretation should be conducted in light of existing common law principles.22 An appreciation of the model litigant obligations may therefore provide the courts with useful contextual information when applying the ordinary rules of statutory interpretation to ascertain what the overarching obligations require in proceedings involving the Crown. This will permit the common law’s model litigant obligations to operate symbiotically with the Act’s overarching obligations, albeit while performing a subsidiary role.

If it transpires, then this will reciprocate the process in which other legal principles have informed the content and application of the Crown’s model litigant obligations. The Victorian Court of Appeal demonstrated this in Solak v Registrar of Titles23 when the Registrar argued that s38 of the Consumer Credit Code made an unsigned mortgage unenforceable, even after that mortgage had been registered.24 The Court regarded this argument as “tenuous” for two reasons.25 First, it was “doubtful” Parliament would abrogate the indefeasibility of fraudulently obtained mortgages without clearly expressing this intention given “the importance and the long standing of the doctrine of indefeasibility”.26 Second, since the Consumer Credit Code’s application was premised on the intended use of the credit, it was “difficult to see why the intention of a fraudster should be of any consequence in an [A]ct designed to protect borrowers”.27

In presenting this argument the Registrar was criticised for failing to maintain the “high standards” prescribed by the Victorian Guidelines.28 That argument, if successful, would have “significantly undermine[d] indefeasibility of registered mortgages” and “cut across” the policy rationale underpinning the Torrens title system.29 The Court regarded this as “puzzling” given the Registrar’s responsibility for administering that system.30 The Court also criticised the Registrar for refusing to indemnify the appellant out of the beneficial fund established to compensate those deprived of an interest in land by the indefeasibility provisions’ operation. This suggested to the Court the Registrar had “forgotten that he is administering a beneficial fund” and held “‘. . . no legitimate private interest of the kind which often arises in civil litigation. [He] acts, and acts only, in the public interest’”.31

A ratchet

The Act’s overarching obligations may also operate as a ratchet to make the Crown’s model litigant obligations more onerous in particular situations.

This view is premised upon the courts accepting a potential difference between the behavioural standards the Act demands of all litigants and the Crown’s model litigant obligations. On the one hand, the Act’s overarching purpose is “to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute” and a practitioner’s duty is “to further the administration of justice”.32 In contrast, the Crown’s model litigant obligations call for “the highest standards”33 in the Crown’s dealings with its subjects: “What might be accepted from others would not be seen as in full accord with the principles of equity and good conscience to be expected in the case of the Crown”.34 The Commonwealth and Victorian Guidelines arguably reflect this by noting that acting as a model litigant “may require more than merely acting honestly and in accordance with the law and court rules”, and that it “goes beyond the requirement for lawyers to act in accordance with their ethical obligations”.35

If it is accepted that, in some circumstances, the Crown’s model litigant obligations are more onerous than the behavioural standards expected from other litigants, then the content of those obligations must rise with the tide of ordinary civil litigation practices.

Whether this is possible will depend on the courts having reserved scope for the Crown’s model litigant obligations to evolve in this manner. Many instances may be quoted in which the Crown’s model litigant obligations have purportedly been expressed in absolute terms. The English courts, for example, regard the Crown as “bound to maintain the highest standards of probity and fair dealing, comparable to those which the courts . . . impose on the officers under their control”.36 The Commonwealth and Victorian Guidelines appear to replicate this by requiring complete propriety, fairness and the highest professional standards. Other statements establish a more comparative threshold by referring to the “standards of fair dealing in the conduct of litigation the courts in this country have come to expect”.37 In either case, community standards regarding propriety, fairness, professional conduct and the accessibility and affordability of justice may evolve. The Act, from one perspective, may be regarded as an expression of this. Accordingly, if these standards can evolve, then the Crown’s model litigant obligations require room to accommodate those developments. If not, then the Crown’s model litigant designation could quickly become otiose.

If this evolutionary process remains possible. then short of reaffirming that these super-charged model litigant obligations will not preclude the Crown from contesting issues which are properly contestable and taking proper steps to protect its interests in litigation,38 further cases are required to ascertain what they may require.

Although the Crown’s model litigant status does not require it to comply with different procedural rules,39 one potential development is the stricter application of these rules against the Crown. An indication of this may be gleaned from the NSW Court of Appeal’s decision in Kable v State of New South Wales (No. 2). There, the State filed a motion seeking to vary the Court’s earlier orders. That motion was filed out of time, and the State requested that the Court dispense with this formal notice requirement because it had informally advised the Court and the other party about the proposed motion shortly after judgment was entered.

The Court held that it was appropriate to exercise its statutory discretion and dispense with this formal requirement in this case. However, Allsop P cautioned against future litigants adopting this approach: “Parties should not think that they can, at their choice, avoid the operation of the [Uniform Civil Procedure Rules 2005 (NSW)] by less formal communication.”40

If a court’s normal approach is to apply its procedural rules stringently, then exceptional circumstances will be necessary before those rules may be relaxed in favour of a party required to conduct itself as a model litigant.

Conclusion

The Act’s overarching obligations are unlikely to topple the Crown from its perch as the “fountain and head of justice and equity”.41

While in many instances those obligations will overlap with the Crown’s model litigant obligations, a clear understanding of the Crown’s responsibilities will assist in determining when and how the Act applies in proceedings to which it is a party. In some cases this may result in the behavioural standards mandated in the Act converging with the Crown’s model litigant obligations. In others this may increase the model litigant obligations’ severity where scope remains for them to evolve.


BRIAN MASON is a member of the Victorian Bar.

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1. (1912) 15 CLR 333 at 342.
2
. Findlay v State of Victoria [2008] VSCA 255 at [11].

3
. Section 55ZI of the Judiciary Act 1903 (Cth).
4. Section 55ZG(3) of the Judiciary Act 1903 (Cth).
5. Caporale v Deputy Commissioner of Taxation (2013) 302 ALR 246 at [50].
6
. Note 2 to the Commonwealth Guidelines, and note 7 to the Victorian Guidelines.

7
. Section 1(2)(a) of the Act.

8
. Yara Australia Pty Ltd v Oswal [2013] VSCA 337 at [20].

9
. Note 8 above at [26].

10
. Department of Justice, Model Litigant Guidelines: Guidelines on the State of Victoria’s obligation to act as a model litigant (2011) at note 11.

11
. Director of Consumer Affairs Victoria v Scully (No. 2) [2011] VSC 239.

12
. Note 11 above at [18]. In doing so his Honour drew on various observations made by Pagone J in Dr Claire Noone, Director of Consumer Affairs Victoria v Operation Smile (Australia) Inc (No. 2) [2011] VSC 153 in a case involving unrepresented defendants and a large volume of material.

13
. Note 12 above.

14
. Note 11 above at [21].

15
. Note 11 above at [23] and [25].

16
. Perfection Fresh Australia Pty Ltd v Melbourne Market Authority [2013] VSC 287.

17
. Note 16 above at [150].

18
. Note 15 above at [151].

19
. See, for example, Mahenthirarasa v State Rail Authority of New South Wales (No. 2) [2008] NSWCA 201, Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537 at 558-9 and Scott v Handley [1999] FCA 404 at [44]. Justice Pagone implicitly accepted this position with respect to Victorian municipal councils in Hoe v Manningham City Council [2011] VSC 37 at [5]. In contrast, Forrest J in Environment East Gippsland Inc v VicForests (No. 2) [2009] VSC 421 declined to comment on this point with respect to a statutory corporation, stating at [35] that it was “not an issue for the court to determine” in an interlocutory application for security to be paid into court in addition to the usual undertaking as to damages.

20
. Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1 at 41-42.

21
. See, for example, the definition of “civil proceeding” in s3 of the Act, and the confirmation in s4(3) that the Act does not apply to proceedings before VCAT.

22
. See, for example, Balog v Independent Commission Against Corruption (1990) 169 CLR 615 at 635-6.
23. Solak v Registrar of Titles (2011) 33 VR 40.
24. Note 23 above at [35].
25
. Note 21 above at [46].
26. Note 21 above at [39].
27. Note 21 above at [42].
28
. Note 21 above at [86].
29. Note 21 above at [86].
30
. Note 21 above at [87].
31. Note 21 above quoting Morley v Australian Securities and Investments Commission (2010) 274 ALR 205 at [716].
32
. Sections 7 and 16 of the Act, respectively.

33
. Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537 at 558 citing Melbourne Steamship Co Ltd v Moorehead (1912) 15 CLR 333 at 342-4.

34
. Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537 at 558-9 citing P & C Cantarella v Egg Marketing Board (NSW) [1973] 2 NSWLR 366 at 383-4.
35. Note 3 to the Commonwealth Guidelines, and note 8 to the Victorian Guidelines.
36. Sebel Products Ltd v Commissioners of Customs and Excise [1949] 1 All ER 729 at 731-2.
37
. Scott v Handley [1999] FCA 404 at [43] which was quoted in Mahenthirarasa v State Rail Authority of New South Wales (No. 2) [2008] NSWCA 201 at [18].
38. See, for example, Zhang v New South Wales [2012] NSWSC 327 at [57] and Findlay v State of Victoria [2008] VSCA 255 at [11], respectively.
39. See, for example, Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 347 at [240].
40
. Kable v State of New South Wales (No. 2) [2013] NSWCA 361 at [2].
41. Esquimault Railway Company v Wilson (1920) AC 358 at 366.

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