The Judiciary Act 1903 (Cth) (Judiciary Act) states that non-compliance with the Attorney-General’s Legal Services Directions 2005 (LSDs) is not to be raised in court proceedings (except by, or on behalf of the Commonwealth). Despite this, some courts have held that non-compliance with the LSDs by the Commonwealth can have consequences for the Commonwealth in court proceedings. In Dunkerley v Comcare  FCA 392 (Dunkerley), the Federal Court confirmed that this is not the case.
On 27 April 2015, the Federal Court handed down its decision in Dunkerley. In that case, the applicant unsuccessfully sought review of an Administrative Appeals Tribunal decision which denied her compensation for medical treatment expenses and incapacity for work under the Safety, Rehabilitation and Compensation Act 1988(Cth).
Among the grounds of appeal on which the applicant sought to rely, was that Comcare had not acted as a model litigant in the proceedings, in contravention of the LSDs, because Comcare failed to clarify for the Tribunal what the applicant’s case was. This was argued to have caused a ‘miscarriage of justice’ which invalidated the Tribunal’s decision.
Juctice Perram rejected this argument, holding that even if Comcare had breached its model litigant obligations under the LSDs (which had not been established), such a breach would have ‘no consequences in terms of civil litigation’.
Prior to the Federal Court’s decision in Dunkerley, there had been inconsistent authority on the issue of the consequences for the Commonwealth of non-compliance with the LSDs, with at least two cases finding that non-compliance with LSDs can result in costs orders against the Commonwealth.
In Nelipa v Robertson  ACTSC 16 (6 March 2009) (Nelipa), Justice Refshauge held ‘the obligation to act as a model litigant and the failure to act in that way can be a relevant factor in considering the appropriate order as to costs’ (). At issue in Nelipa was whether the Commonwealth had complied with its discovery obligations in a timely way and, following the court’s finding that it had not, the court ordered the Commonwealth to pay the plaintiff’s costs from the date it ought to have done so. The court reasoned, had it done so, it would have put the plaintiff in a position to discontinue his claim rather than continue with his ultimately unsuccessful proceedings.
Nelipa was followed by the Federal Court in Australian Competition and Consumer Commission v Australia New Zealand Banking Group Limited  FCA 567 (4 June 2010) (ACCC v ANZ). In that case, the ACCC issued a large number of interrogatories out of time and a hearing was held on its entitlement to do so. The court allowed the ACCC’s application in part, however it made a costs order in favour of the ANZ Bank.
The issue was finally settled, in Croker v The Commonwealth  FCAFC 25 (28 February 2011) (Croker).
In Croker, the Full Court of the Federal Court found that, even if the Commonwealth had breached its obligations as a model litigant (which had not been demonstrated), non-compliance with the LSDs could not form the basis for any orders against the Commonwealth due to the operation of s55ZG of the Judiciary Act. This section states ‘the issue of non-compliance with a Legal Services Direction may not be raised in any proceeding (whether in a court, tribunal or other body) except by, or on behalf of, the Commonwealth’.
Croker has been subsequently followed in Deputy Commissioner of Taxation v Bayconnection Property Developments Pty Ltd (No 2)  FCA 208, and now in Dunkerley.
It is noteworthy, in Croker, the court referred to, and relied on, section 55ZG of the Judiciary Act, whereas that section was not considered in the judgments given by the courts in Nelipa and ACCC v ANZ. Having regard to the above discussion, it may be necessary for the Commonwealth to draw the court’s attention to s55ZG of theJudiciary Act and to the Federal Court’s decision in Croker in proceedings where another party seeks to rely on non-compliance with the LSDs as a basis for the imposition of costs or other sanctions against the Commonwealth.