Last November, when Mark Dreyfus unveiled his plan to protect some losing parties in civil litigation from adverse costs orders, he said it was all about addressing “power disparities”.

What a pity the Attorney-General’s concern about the imbalance in financial power has not always been apparent in the way the government and its agencies have conducted themselves in court.
Recent cases have shown that parts of the public sector seem happy to use taxpayers’ money to drag out civil disputes.

On other occasions public money has been used to settle claims against the Commonwealth for reasons that look decidedly odd.

It’s as if the officials running these matters for the government have no idea there are rules in place that require them to conduct themselves as model litigants so they don’t take advantage of their superior resources to out-spend those who challenge them in court.

The model litigant rules require governments to deal with claims promptly, to avoid delays, to pay legitimate claims without requiring litigation and to limit the scope of proceedings whenever this is possible.
And when it comes to defending major financial claims, the rules are designed to ensure big settlements can only be made by the government in line with legal principle and practice. Unfortunately for taxpayers, these rules are useless.

They cannot be enforced by private litigants – or anyone outside the government – to ensure the government and its agencies conduct themselves appropriately in court and use taxpayers’ money properly.
Ten years ago, the Productivity Commission wanted something more rigorous. It called for the model litigant rules to be made enforceable – a recommendation that has been successfully opposed by powerful government agencies.

The result has been predictable. In one recent matter, the government has been the beneficiary of exactly the same imbalance in financial power that so concerns the Attorney-General.

The government has still not paid millions in damages to the graziers who won a class action in 2020 over the Gillard government’s six-month ban on live-cattle exports to Indonesia. That ban was imposed in 2011 by former agriculture minister Joe Ludwig who retired from parliament at the 2016 election. He was subsequently found by the Federal Court to have committed misfeasance in public office.

The court found that the ban he imposed was invalid, he had been recklessly indifferent about whether it could be imposed without allowing for exceptions, and recklessly indifferent about the injury it produced.
It is now three and a half years since the court ruled against the government and during that time the parties have been unable to reach agreement on how much the government should pay.
The government has offered $215m and the claimants in the class action have made a counteroffer of $510m plus interest and costs, which on some estimates would mean a final bill of about $900m.

Keep in mind that the government has already lost this case and interest on the eventual damages bill is still growing.

Legal costs in this case have been boosted by the fact that the government took a tough approach during the trial and hit the graziers with what is believed to have been about 20 separate claims for discovery of documents.

The graziers have given the government until 5pm on Friday to accept their offer. If there is no agreement, their offer lapses and that means there is a real prospect that the eventual cost to taxpayers could blow out even further.

On October 18, the court ordered a fresh four-week trial aimed at trying to reach a conclusive finding about exactly how many cattle would have been sold to Indonesia but for the ban.
That means another round of duelling silks and expert witnesses unless the parties abandon the litigation route and divide the class members into groups for binding arbitration.

In order to put this into perspective, keep in mind that the model litigant rules say the government should “endeavour to avoid, prevent and limit the scope of legal proceedings wherever possible”.

How can that be reconciled with the fact that it has been arguing for three and a half years not on liability, but on how much it needs to pay to people who were hurt by ministerial misfeasance almost 13 years ago?

Now consider the very different approach the government took with Brittany Higgins.

Her claims have never been upheld in court.

Yet the government paid her $2.4m after a one-day mediation.
Two former Coalition ministers who could have challenged her assertions were excluded under threat of financial penalty from the proceedings that were convened under the current government.

So when it comes to cattle producers, the government plays hardball after the graziers won in court and a Labor minister was criticised.

But with Higgins, a payment was made that seems difficult to reconcile with legal practice and principle, as required by the rules.

This is not the only matter that should worry taxpayers.

Nobody should forget that the ABC chose to spend $200,000 of taxpayers’ money in 2021 on legal and settlement costs when former Liberal MP Andrew Laming sued reporter Louise Milligan. Milligan was sued in her private capacity, not the ABC. She could have settled with minimal costs had she apologised promptly.

In a perfect world, litigation should only be about justice. But when government is involved, taxpayers need to know that public money and political power are controlled by enforceable rules.