Legal Services Branch Instruction Bulletin
LSB IB 2013/10
Obligation to act as a model litigant
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To advise LSB staff that the ATO has an obligation to act as a model litigant.
2. The model litigant obligation is outlined in Appendix B of the Legal Services Directions 2005 issued by the Attorney-General (pursuant to section 55ZF of the Judiciary Act 1903). The Attorney-General, as first law officer, is responsible for the provision of legal services to the Commonwealth and its agencies, including legal advice to Cabinet.
3. The ATO's obligation to act as a model litigant applies to handling of claims and conduct of litigation including proceedings before courts, tribunals, inquiries and Commissions. The obligation extends to arbitration and alternative dispute resolution processes involving Commonwealth departments, their agencies and ministers and officers (only where the Commonwealth indemnifies them against claims for action taken in the course of their duties).
4. Legal Services Directions 2005 oblige the Commonwealth, its officers, solicitors and counsel, to act with complete propriety, fairly and in accordance with the highest professional standards in handling claims, noting that the agency is not to start legal proceedings unless it is satisfied that litigation is the most suitable method of dispute resolution.
- act honestly and fairly
- deal with claims promptly
- pay legitimate claims without litigation
- act consistently in the handling of claims and litigation
- consider alternative dispute resolution.
Alternative dispute resolution
8. When participating in alternative dispute resolution, agencies are to ensure that their representatives participate fully and effectively and have authority to settle the matter. LSB IB 2013/06 Authorisation of EL2 and EL1 Legal Service Officers to settle Tax Resolution litigation and LSB IB 2013/07 Settlement of debt recovery proceedings provide further guidance on the procedures to be followed by LSB staff.
9. Taxpayers, their representatives and external legal service providers need to be advised of our model litigant obligation at the commencement of litigation. If the external legal provider has been involved prior to litigation, the model litigant compliance information should be included at the point at which they are provided with instructions to act in the litigation.
10. Counsel and other external legal service providers must be given a copy of Appendix B to the Legal Services Directions 2005 and a notice to comply with such, when first engaged on behalf of the ATO in litigation matters. This ensures that they are informed as to the obligations imposed by the Commonwealth when they act on its behalf.
Part IVC litigation
11. A statement outlining the Commissioner's model litigant obligation and a copy of Appendix B to the Legal Services Directions 2005 must be provided to the taxpayer or their advisors with the section 37 statement for Administrative Appeals Tribunal matters or with the appeal statement for Federal Court proceedings.
12. A statement outlining the Commissioner's model litigant obligation and a copy of Appendix B to the Legal Services Directions 2005 must be provided to the taxpayer or their advisors at the time the ATO (or representatives) lodges its pleadings. Also (where relevant) these documents should be provided with the section 37 statement for Administrative Appeals Tribunal matters or the appeal statement for Federal Court proceedings.
13. Legal Services Directions 2005 covers all debt litigation (other than routine non-contested matters) including contested debt matters, preference cases, intervention proceedings, ADJR (Administrative Decisions judicial review) applications, appeals, release cases, Higher Education Contribution Scheme deferments and cases where a defence is filed (whether a bare defence or not) with the Deputy Commissioner as the defendant.
General Counsel Practice
14. The claimant/applicant or their representative must be provided with a statement outlining the Commissioner's model litigant obligation and a copy of Appendix B to Legal Services Directions 2005 with the section 37 statement or Administrative Appeals Tribunal matters or with the appeal statement for matters in respect to other jurisdictions such as the Federal Court, Australian Industrial Relations Commission, the Australian Human Rights Commission. The required information is to be provided at the time that the documents outlining the ATO's response to the complainant's assertions is provided.
15. The Legal Services Directions 2005 cover handling of claims and conduct of litigation. It does not apply to compensation for detriment caused by defective administration (CDDA) scheme matters. When a matter is to proceed by arbitration or other forms of alternative dispute resolution then the required information should be provided to the claimant/applicant (under cover of letter) not later than the date that has been determined for each matter.
Office of Legal Services Coordination
16. The Office of Legal Services Coordination (OLSC) is the branch of the Attorney-General's Department which is responsible for the administration of the Legal Services Directions 2005. The OLSC monitors agency compliance of the Legal Services Directions 2005 which includes the model litigant obligation.
Consideration and reporting of non-compliance
17. Any possible or actual non-compliance with the model litigant obligation must immediately be discussed with a manager/team leader. This includes allegations of non-compliance made against employees of the ATO and/or against our legal service providers.
18. Legal Services Branch (LSB) will consider the circumstances of any possible or actual non-compliance and prepare a report for the Assistant Commissioner, Legal Services within 21 days of identification of or receipt of an allegation of non-compliance. The Assistant Commissioner will review the report and determine:
- what form of compliance with the Legal Services Directions 2005 is the most appropriate in the circumstances,
- whether appropriate steps have been taken to ensure that the subject of the allegation of non-compliance has been fairly and honestly considered, and
- whether appropriate remedial action has been taken, if necessary.
19. The Assistant Commissioner will notify OLSC as soon as practicable of all known, possible or apparent breaches or allegations of possible or actual non-compliance (apart from those which are spurious complaints in which there is no particularisation of the allegation) using the Agency Notification Form. If necessary, an updated Agency Notification Form will be submitted, providing further information on the investigation, outcome or remedial action taken. OLSC monitors issues reported to it to identify systemic issues in an agency or in the sphere of Commonwealth legal work generally.
20. Where any possible or actual non-compliance with the model litigant obligation has been alleged by a claimant/applicant or their representative, LSB will ensure that the taxpayer/representative is kept informed of the progress and outcome of the review.
Annual Compliance Certificate
21. Details of any known, possible or apparent breaches of the Legal Services Directions 2005 including the model litigant obligation or allegations of possible or actual non-compliance not previously reported to OLSC, and the details of actions taken to address the causes of such breaches, must be reported in the Annual Compliance Certificate provided to OLSC within 60 days of the end of the financial year. The ATO is to demonstrate its compliance with the Legal Services Directions 2005 and show that appropriate systems are in place for monitoring compliance.
Notice to comply
The Commissioner of Taxation, as a Commonwealth agency is obliged to act as a model litigant in his handling of legal matters including litigation. For your information we enclose a copy of 'The Commonwealth's obligation to act as a model litigant.'
These guidelines are issued with the Legal Services Directions 2005 by the Attorney-General to all Australian Government agencies and act as a framework for handling legal matters including litigation.
These guidelines oblige the Commissioner of Taxation to act honestly and fairly at all times when handling a dispute or claim with you.
Any complaint alleging a breach of the model litigant obligation should be made in writing, particularising your concerns and addressed to:
Assistant Commissioner Legal Services
Australian Taxation Office
GPO Box 9990
CANBERRA ACT 2601
The Assistant Commissioner Legal Services will review and consider the circumstances of your complaint and provide a response. We will also report the complaint and the outcome to the Office of Legal Services Coordination (OLSC) in the Commonwealth Attorney-General's Department.
OLSC does not resolve complaints from members of the public about agency compliance however it does monitor issues reported to it to identify systemic issues in an agency or in the sphere of Commonwealth legal work generally. As part of this reporting process, the Commissioner of Taxation is required to provide an Annual Compliance Certificate to OLSC setting out the extent to which it has complied with the Legal Services Directions 2005 and the action taken to address potential non-compliance and improve the ATO's role as a model litigant.
Further information on how OLSC deals with notification of breaches or allegations of non-compliance of the Legal Services Directions 2005 can be found at www.ag.gov.au/olsc
- Law Administration Practice Statement PS LA 2009/9 - Conduct of Tax Office litigation (specifically paragraph 16-20)
- Attorney-General's website
- additional information relating to Legal Services Directions 2005,
- Guidance note 3
- Litigation - Administrative Law matters Interpretative Advice
Assistant Commissioner, Legal Services BranchDate of decision: Immediate Date of publication: 11 June 2013
Legal Services Directions 2005
Atourney General's Department website
Atourney General's Department (Office of Legal Services Coordination)
Guidance note 3
Alternative dispute resolution home page [ATO internal link]
Notice to comply [ATO internal link]
Section 37 statements and T documents [ATO internal link]
Handling compensation and similar monetary claims against the ATO [ATO internal link]
Litigation - Administrative Law matters [ATO internal link]
Release cases [ATO internal link]
Delegations and authorisations [ATO internal link]
Related Practice Statements:
Law Administration Practice Statement PS LA 2009/9 - Conduct of Tax Office litigation