1998
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES

JUDICIARY AMENDMENT BILL 1998

EXPLANATORY MEMORANDUM

(Circulated by authority of the Attorney-General, 
the Hon. Daryl Williams AM, QC, MP)

ISBN:  0642 379017
•	
Judiciary Amendment Bill 
outline
The Bill gives effect to the Government’s decisions on implementing the Report of the Review of the Attorney-General’s Legal Practice of March 1997.  The review was established by the Attorney-General in November 1996 to consider the needs of the Commonwealth for legal services, and how those needs might best be met.
The report made 16 recommendations for improving the way in which the legal services needs of the Commonwealth are met.  In essence, it concluded that this could best be achieved by a combination of a central Commonwealth legal services provider, and private sector and in-house providers, operating with a maximum of competitive neutrality and contestability with only limited tying (of core and high risk matters) to the central provider.
The report recommended that the Attorney-General’s Department Legal Practice be restructured to comply with competitive neutrality principles, to enable it to compete with the private sector, and to be transparent and accountable.  To this end, the report recommended that most of the legal service elements of the Legal Practice be placed in a separate organisational structure (the Australian Government Solicitor) and that the policy and other elements of the existing Legal Practice remain within the Attorney-General’s Department.
The Bill amends the Judiciary Act 1903 to establish the Australian Government Solicitor (AGS) as a separate statutory authority to provide legal and related services for government purposes.  It also includes transitional provisions and consequential amendments to other legislation.
The amendments to the Judiciary Act 1903 are contained in Schedule 1 to the Bill and will:
•	set out rights, duties and obligations of lawyers in the Attorney-General’s Department,
•	establish the AGS as a statutory authority separate from the Attorney-General’s Department, and set out the constitution, functions, and powers of the AGS (including the persons and bodies for whom the AGS may provide legal and other services),
•	set out rights, duties and obligations of AGS lawyers,
•	provide for the appointment and terms and conditions of a CEO and staff for the AGS,
•	provide for the position regarding taxation and corporate governance of the AGS, and
•	confer on the Attorney-General the power to issue Legal Services Directions relating to the performance of Commonwealth legal work.
Transitional provisions are contained in Schedule 2 to the Bill.  Amendments to other legislation as a consequence of the amendments in Schedule 1 are contained in Schedule 3.

Financial impact
The establishment of the AGS will involve transitional and establishment costs associated with staff transfer and redundancy, leasing arrangements and other transitional issues.  The reforms to the existing Australian Government Solicitor will deliver ongoing savings for Departments and agencies through enhanced competition.

Notes on clauses
Clause 1 - Short title
This clause sets out the short title of the proposed Act.
Clause 2 - Commencement
This clause specifies when the provisions of the Act are to commence.  With the exception of the items in Schedules 1, 2 and 3, the Act will commence on the day the Act receives the Royal Assent.
The items in these Schedules will commence on a day fixed by Proclamation.  This will enable particular items in the Schedules to commence on different days fixed by Proclamation.  If an item has not been proclaimed to commence within 6 months from the day the Act receives Royal Assent, it will commence on the first day after that period.
Clause 3 - Schedule(s)
This clause provides that the Acts set out in each Schedule are amended or repealed as set out in the Schedule.  Other items in the Schedules have effect according to their terms.  There are 3 types of items in the Schedules:
•	amendments to the Judiciary Act 1903 - these are set out in Schedule 1,
•	transitional provisions, which are required in light of the establishment of the AGS as a separate statutory authority - these are set out in Schedule 2, and
•	amendments to other Acts that are consequential upon the amendments to the Judiciary Act 1903 - these are set out in Schedule 3.
The main changes made in each of these Schedules are discussed in the following sections.
Schedule 1 - Amendment of the Judiciary Act 1903
ITEMS 1, 2 & 3
DEFINITIONS
In light of the changes that the Bill will make to the structure and statutory underpinning of the existing Australian Government Solicitor, it is necessary to repeal the definition of ‘Australian Government Solicitor’ in the Judiciary Act 1903 (Item 2) and insert a new definition of ‘AGS’, which will mean the Australian Government Solicitor as established under Division 2 of the new Part VIIIB of the Judiciary Act 1903 (Item 1).  A definition of ‘legal practitioner’ will also be inserted in current section 2, in view of its use in different parts of the Act (Item 3).
ITEM 4
ROLE OF ATTORNEY-GENERAL’S LAWYERS
Sections 55E, 55F and 55G of the Judiciary Act 1903 currently provide for the establishment of the Australian Government Solicitor, the ability of the existing Australian Government Solicitor to charge for services, and certain rights, duties and obligations of lawyers of the Attorney-General’s Department.  Due to the establishment of the AGS under a new statutory structure, these sections will be repealed.  The matters currently dealt with in sections 55E and 55F will be dealt with principally in new Part VIIIB.  The repealed sections will be replaced with new sections 55E, 55F and 55G, dealing with the rights, duties and obligations of Attorney-General’s lawyers, the circumstances when an Attorney-General’s lawyer may act for 2 or more parties, and the charging by the Commonwealth of fees for services of Attorney-General’s lawyers.  These provisions will enable Attorney-General’s lawyers to continue to give and charge for legal advice, in particular, on legislation which is administered by the Attorney-General.
New section 55E, which is based on current section 55G, sets out certain rights, duties and obligations of lawyers of the Attorney-General’s Department.  An Attorney-General’s lawyer will be defined to mean the Secretary or an officer or employee of the Attorney-General’s Department whose name is on a roll of legal practitioners referred to in current subsection 55D(1).  An officer or employee of the AGS will not fall within the definition of ‘Attorney-General’s lawyer’, because they will not be an officer or employee of the Attorney-General’s Department (see new section 55ZB).  An Attorney-General’s lawyer, when acting in that capacity, will be entitled to do everything necessary or convenient for that purpose.  In particular, they will be able to practise as a barrister, solicitor, or barrister and solicitor in any court (or tribunal) in any State or Territory, even if their admission is for a limited form of practice (for example, for practice only as a solicitor or only as a barrister) (new subsection 55E(2)).  Similarly, as at present, an Attorney-General’s lawyer will not need to hold a current practising certificate.
It is intended that Attorney-General’s lawyers will be subject to only some parts of the State and Territory laws governing legal practitioners.  These laws, which provide State and Territory regimes for the supervision of lawyers, govern the conduct of private practitioners and law firms in a manner which is not consistent with the operation of a Commonwealth Department and with the delivery of legal services to government.  The position taken in the Bill in this regard is similar to that sought to be achieved under current section 55G.  Thus, it is not intended that Attorney-General’s lawyers be subject to State and Territory provisions concerning such matters as trust account obligations, audits, fidelity fund contributions, professional indemnity insurance and regulation of costs.  However, they will be subject to laws that impose rights, duties, or obligations on legal practitioners in relation to their clients or to the courts, or provide for disciplinary proceedings in relation to the misconduct of legal practitioners (new subsection 55E(3)).
This means that the general obligations on a lawyer, both in respect of their client and the courts, will apply, including the duty to act honestly and diligently in the client’s interests and, subject to new section 55F, to avoid conflicts of interest.
However, in determining what duties, rights and obligations apply to an Attorney-General’s lawyer, it will be necessary to take into account the lawyer’s position as an officer or employee of the Attorney-General’s Department (new subsection 55E(5)).  This provision is intended to reinforce the position that not all duties and obligations of a private practitioner will be relevant to the practice of law in the Attorney-General’s Department.
Attorney-General’s lawyers will also be exempt from the operation of any common law rules, any State or Territory law or any specific provisions of a State or Territory law that are prescribed for the purpose of new section 55E (new subsection 55E(6)).  This will enable Attorney-General’s lawyers to be exempted from the operation of particular laws which are inconsistent with their role as lawyers in the Attorney-General’s Department.
An Attorney-General’s lawyer will be able to act for 2 or more parties with conflicting interests, if this is approved by the Attorney-General or if it comes within arrangements approved by the Attorney-General (new section 55F).  At present, a similar provision (current subsection 55E(9A)) applies to lawyers of the Attorney-General’s Department who are also Australian Government Solicitor lawyers.  The new provision could facilitate an Attorney-General’s lawyer giving advice to 2 or more parties on legislation administered by the Department.  These rules will apply notwithstanding anything in a State or Territory law pertaining to legal practitioners (new subsection 55E(4)).
The Bill empowers the Commonwealth to charge fees for legal professional services, and for disbursements incurred in relation to those services, provided by an Attorney-General’s lawyer acting in that capacity (new section 55G).  In the event of litigation, the amounts charged will be recoverable by a client as costs incurred by the client, in accordance with the usual rules for recovery of costs.
ITEM 5
THE AGS AND LEGAL SERVICES DIRECTIONS 
Item 5 of Schedule 1 inserts new Part VIIIB which provides for the establishment of the AGS, and Part VIIIC which relates to the Attorney-General’s power to issue Legal Services Directions.
Part VIIIB - the AGS
Definitions
Division 1 of Part VIIIB comprises new section 55I, which contains definitions applicable to the Part.
Establishment and functions of the AGS
Division 2 of Part VIIIB comprises sections 55J-55P.  It provides for the establishment of the AGS as a body corporate with power to do all things necessary or convenient for or in connection with the performance of its functions (new sections 55J, 55L and 55M).  The Commonwealth Authorities and Companies Act 1997, which deals with matters such as the reporting, accountability and financial requirements of Commonwealth authorities, will also apply to the AGS.
New section 55K sets out the AGS’s functions, which are circumscribed by constitutional limits on the legal services the AGS can provide.  Its functions include providing legal services and related services to the Commonwealth, to persons and bodies for any purpose for which the Commonwealth has the power to make laws, and, on request, to the States, Territories and Norfolk Island and to State, Territory and Norfolk Island persons and bodies.  The concept of ‘legal services’ is intended to operate broadly, and extends beyond the provision of legal advice and representation in litigation.  
To avoid doubt, new section 55N sets out the persons and bodies to whom the AGS may provide services in the exercise of its functions.  In addition to the persons and bodies listed in new subsections 55N(1) and (2), the AGS will have power to provide services to other persons or bodies if either the Attorney-General requests the AGS to do so, or the CEO of the AGS decides to provide the services (new subsections 55N(3) and (4)).
Persons and bodies who would potentially fall within this category include:
•	liquidators, receivers, managers and bankruptcy trustees appointed in relation to companies or estates in respect of which the Commonwealth or a Commonwealth agency is a creditor, and
•	persons who are the subject of an indemnity given by the Commonwealth.
New section 55P authorises the AGS to charge for services it provides, and disbursements it incurs in the course of performing its functions and is intended to continue the effect of current section 55F.  In particular, a client of the AGS may recover costs in the same way as a private legal practitioner’s client, subject to the usual rules and principles relating to costs (including the taxation of costs).
Capacity of AGS and AGS lawyers to act
Division 3 of Part VIIIB comprises sections 55Q and 55R and deals with the capacity of the AGS and AGS lawyers to act.  These provisions are intended to duplicate the effect of new subsections 55E(2)-(6) and section 55F (which apply to Attorney-General’s Department lawyers) in relation to the AGS and AGS lawyers.  In light of the position of the AGS as a Commonwealth statutory authority, it is also appropriate to modify for AGS lawyers the usual State and Territory rules applicable to private practitioners (new section 55Q).
The AGS will be able to act in a matter for 2 or more parties with conflicting interests, if this is approved by the Attorney-General or if it comes within arrangements approved by the Attorney-General (new section 55R - see also new section 55F in respect of Attorney-General’s lawyers).
Appointment and terms and conditions for CEO and staff
The provisions for appointment and terms and conditions of the CEO of the AGS and AGS staff are set out in Division 4 (new sections 55S-55ZB).  The CEO is to be the director of the AGS for the purposes of the Commonwealth Authorities and Companies Act 1997, and will therefore be in an equivalent position to the board of a corporation which is a government business enterprise (new subsection 55S(2)).  The CEO will be appointed by the Attorney-General and the Minister for Finance and Administration for a period of up to 5 years, although the CEO will be eligible for reappointment (new section 55T).
The Attorney-General and the Minister for Finance and Administration will be able to terminate the CEO’s appointment at any time (new section 55W).
The CEO will be empowered to employ staff and to determine the terms and conditions of their employment (new section 55ZB).  This power will operate together with the Workplace Relations Act 1996 which enables certified agreements and Australian workplace agreements to be entered into by AGS and its staff.
Provisions affecting the taxation and corporate governance of the AGS
New Division 5 concerns taxation and tax equivalent payments and corporate governance of the AGS.
The Government’s Competitive Neutrality Policy Statement of June 1996 requires that government business enterprises should not enjoy net competitive advantages over their private-sector competitors simply by virtue of public ownership.  This policy was reflected in the recommendations of the Report of the Review of the Attorney-General’s Legal Practice.
The AGS will be exempt from taxation under State and Territory laws, except where such a law is prescribed by regulation (new section 55ZC).  However, the AGS will be required to make a tax-equivalent payment to the Commonwealth in respect of each financial year, determined in accordance with arrangements notified to the AGS for this purpose by the Attorney-General and the Minister for Finance and Administration.  It is envisaged that the amount of the payment will be calculated by reference to any exemption from State, Territory or Commonwealth taxation which applies to the AGS, so as to ensure that the AGS does not enjoy a net competitive taxation advantage in relation to privately-owned law firms (new section 55ZD).
New section 55ZE provides the process for determining the corporate governance requirements that are to apply to the AGS.
The Attorney-General and the Minister for Finance and Administration, acting jointly and after consultation with the CEO, will be able to inform the CEO in writing of the corporate governance arrangements applicable to the AGS.  Consistent with the Government’s policy of competitive neutrality of government business enterprises, these arrangements will be able to require the AGS to pay a dividend to the Commonwealth, and to make a payment for the purpose of ensuring the AGS does not enjoy any net competitive advantages over its competitors by virtue of its public sector ownership (new section 55ZE).  The section will enable the Attorney-General and Minister for Finance and Administration to establish policies for the operation of the AGS in a manner similar to those applying generally to government business enterprises under the Government’s Government Business Enterprises Arrangements, but will enable the particular role and circumstances of the AGS to be taken into account.
Part VIIIC - Legal Service Directions
The Report of the Review of the Attorney-General’s Legal Practice  recommended that the Attorney-General be empowered under the Judiciary Act 1903 to issue legal service directions concerning the provision of legal services to the Commonwealth.  
The report recommended (at pages 163 - 167) that the legal service directions should reflect the balance between:
•	the responsibility of Departmental Secretaries and agency heads to obtain the best value for expenditure on legal services to enable them to meet their performance targets, and the need for them to have the greatest possible level of choice, and
•	the special legal service responsibilities of the Attorney-General, which include:
•	direct and personal responsibilities for legal services in relation to a core executive activity of Government (for example, legal advice to Cabinet, advice on Cabinet submissions and draft legislation, constitutional litigation, national security matters, public international law and litigation, and other issues of strategic or political significance to the Government), and
•	responsibility for the general operation and effectiveness of the system by which legal services are provided to the Commonwealth, including responsibility for ensuring that legal services are consistent and coordinated, that they promote the interests of the whole of government and that public interest considerations are met (including that persons are treated fairly in the exercise of the Commonwealth’s legal rights and powers).
The Bill provides that the Attorney-General may issue Legal Services Directions applying to Commonwealth legal work (new section 55ZF).  The Directions may apply generally to Commonwealth legal work, to a particular category of Commonwealth legal work, or to Commonwealth legal work being performed in a specific case or matter.  They may be published or notified in whatever manner the Attorney-General considers appropriate.
Some of the matters that may be appropriate subjects for Legal Services Directions are set out in the report.  They include:
•	specifying the types of matters for which Departments and agencies are required to use the AGS or other specified legal service providers.  Consistent with the Attorney-General’s First Law Officer functions, appropriate categories of matters for specification might include matters where a significant or unacceptable risk could arise from inconsistency or lack of coordination in the delivery of legal services or from failure to identify and appropriately deal with ‘whole-of-government’ or public interest issues, and the risk cannot be adequately managed in any other way.  Examples given are:
•	litigation that may set a precedent that could affect the operations of more than one agency or the whole of government,
•	litigation which may require significant coordination between a range of agencies,
•	resolution of disagreements between Departments and agencies involving an issue as to the interpretation or application of the law, and
•	matters affecting or potentially affecting the whole of government, and
•	specifying the obligation that the Commonwealth should act as a model litigant and the content of this obligation.  Elements of the model litigant obligation could include a requirement that the Commonwealth not decline to pay a legitimate claim, not engage in delaying tactics, not undertake vexatious appeals, and not take unfair advantage of the fact that a claimant does not have the resources to pursue legal proceedings.
‘Commonwealth legal work’ will be broadly defined (new subsection 55ZF(3)) to ensure that the Attorney-General is able to protect, through the issue of Directions, the range of the legitimate legal service interests of the Commonwealth.  The definition will include work performed by or on behalf of the AGS in pursuit of its functions, as well as work performed by any other person for the Commonwealth, Commonwealth authorities and companies, persons for whom the AGS could act, and for the States, the Australian Capital Territory, the Northern Territory, and Norfolk Island if they have requested the AGS to act for them in a particular matter.  The definition of Commonwealth legal work will therefore extend to government legal work performed by private legal practitioners and legal firms for the persons and bodies mentioned above, as well as work performed by in-house lawyers in Commonwealth Departments, agencies and companies.
The persons and bodies who must comply with Legal Services Directions include, in effect, the Commonwealth, a Commonwealth authority or company, a client for whom the AGS was acting and a client for whom a private practitioner was performing Commonwealth legal work, as well as the AGS, and a private practitioner and their firm performing Commonwealth legal work (new subsection 55ZG(1)).
The power to issue Legal Services Directions is intended to enable the Attorney-General to protect the legal interests of the Commonwealth in relation to the delivery of legal services.  For this reason, Directions will be enforceable only by, or on the application of, the Attorney-General (new subsection 55ZG(2)).  This would enable the Attorney-General, in an extreme case, to seek an injunction to address a breach.  
Non‑compliance with the Directions will be able to be raised in proceedings only by or on the application of the Commonwealth (new subsection 55ZG(3)).  Thus, it will not be possible for a party other than the Attorney-General or the Commonwealth to assert non-compliance as the basis of any claim or defence in legal proceedings.  In particular, it is not intended that litigants opposed to the Commonwealth should be able to rely on the Directions to challenge Commonwealth actions.  Rather, the question of compliance with the Directions should be a matter primarily between the Attorney-General as First Law Officer and the relevant Department or agency.
Any other approach could give rise to technical arguments and result in additional costs and delay in litigation involving the Commonwealth.  For example, it is not intended that a litigant be able to argue that the Commonwealth was making a technical argument in breach of the model litigant obligation (if this were provided in the Legal Services Directions).  The alleged breach could, however, be raised by the litigant with the Attorney-General or the Office of Legal Services Coordination (the office established within the Attorney-General’s Department, on the recommendation of the Report of the Review of the Attorney-General’s Legal Practice, to support the Attorney-General in relation to his responsibilities for legal services to the Commonwealth).
For the Attorney-General to discharge the functions of First Law Officer (particularly in ensuring Commonwealth legal work is consistent and coordinated), it may be necessary to require, in a Legal Services Direction, the production of information, documents, or records that relate to the provision of legal advice or to legal proceedings.  The need to rely on this power could arise in respect of a Commonwealth agency which is a legal entity distinct from the Commonwealth.  It may also be appropriate for Attorney-General’s Department lawyers, and other Government officers advising on or drafting legislation, to have access to relevant documents (including legal advices).
Where information, documents or records are provided under a Legal Services Direction, legal professional privilege or a duty of confidence will not be breached and any privilege which exists will be taken not to have been waived by the disclosure.  A person performing Commonwealth legal work will also be able to provide information, documents or records relating to their work to the Attorney-General or a person authorised by the Attorney-General, without breaching legal professional privilege or any duty of confidence, even if this is not required under a Legal Services Direction (new section 55ZH).
To prevent the Attorney-General being subjected to an action or proceedings arising from the performance of his functions, new subsection 55ZI(1) provides that the Attorney-General is not to be liable in respect of an act done or omitted to be done in compliance or purported compliance with a Legal Services Direction.
Similarly, no other person is to be liable in relation to an act done or omitted to be done by the person in compliance, or in good faith in purported compliance, with a Legal Services Direction (new subsection 55ZI(2)).
Schedule 2 - Transitional provisions
Schedule 2 to the Bill contains a number of transitional provisions to facilitate the change of the existing Australian Government Solicitor from being part of the Attorney-General’s Department to a separate statutory authority.
Item 1 of Schedule 2 contains 3 definitions that apply to the provisions in Schedule 2.  These are a definition of ‘former AGS’ as the Australian Government Solicitor as established immediately prior to the commencement of the reforms in Schedule 1 to the Bill, a definition of ‘AGS’ as the new Australian Government Solicitor established under the Judiciary Act 1903 and a definition of ‘commencement time’ as the time when Schedule 2 commences.
The other items in Schedule 2 are intended to enable the AGS to take over the business, assets, liabilities and records of the former AGS.  Upon commencement, the AGS will become the successor in law of the former AGS and will take over the business of the former AGS.  Further, the Attorney-General will have power to transfer Commonwealth assets and liabilities to the AGS.  These powers are intended to operate in addition to any other powers of the Commonwealth to transfer assets and liabilities to the AGS.
Schedule 3 - Consequential amendments
Schedule 3 provides for amendments to other legislation as a consequence of the amendments to the Judiciary Act 1903 contained in Schedule 1.
A range of statutory legal functions is currently conferred under certain other Acts on the Secretary to the Attorney-General’s Department or certain Departmental officers authorised under current subsection 55E(4) of the Judiciary Act 1903.  The relevant Acts are the Aboriginal Councils and Associations Act 1976, the Aboriginal Land (Lake Condah and Framlingham Forest) Act 1987, the Defence (Visiting Forces) Act 1963, the Director of Public Prosecutions Act 1983, the Lands Acquisition Act 1989, the Lands Acquisition (Northern Territory Pastoral Leases) Act 1981, the National Parks and Wildlife Conservation Act 1975 and the Northern Territory (Self-Government) Act 1978.  The Bill amends these Acts to confer the functions on other more appropriate persons, primarily the Secretary to the Department administering the legislation or on an appropriate statutory office-holder:  Schedule 3, Items 1-4, 6-17, 21-29.
Consistent with Government policy on the exemption of government business enterprises from the operation of administrative law requirements, Schedule 3 also contains amendments to exempt the AGS from the operation of the Administrative Decisions (Judicial Review) Act 1977 and the Freedom of Information Act 1982.  The exclusion of the AGS under the Freedom of Information Act 1982 also has the effect of excluding the AGS from the application of the Information Privacy Principles in the Privacy Act 1988: Schedule 3, Items 5, 18-20.