Most Read Contributor in New Zealand, September 2016
Civil pecuniary penalties can be hefty and are being used
increasingly in the major commercial statutes to drive
This trend has raised hard questions about the State pursuing
criminal law goals without affording those involved the protections
which are usual in the criminal context.
So a review by the Law Commission is timely.
Submissions on the Commission's
Issues Paper are due by 15 February 2013.
Most civil pecuniary penalties are imposed in the securities
market and competition spheres, and the sums at issue can be
The highest maximum penalty for an individual is $1 million and
for a body corporate, the greater of either $10 million, an amount
based on the commercial gain resulting from the contravention, or
10% of turnover.
Inconsistency in application
One of the main issues identified by the Law Commission, echoing
concerns expressed by the Legislation Advisory Committee, is that
civil pecuniary penalty provisions are being included in
legislation without any authoritative, principled guidance from
This has resulted in inconsistency both within and between
statutes as to:
whether civil pecuniary penalties are provided for and, if
the penalty levels and surrounding procedural rules and
Crossing the 'civil-criminal' divide
The Law Commission describes civil pecuniary penalties as a
'hybrid' action in that they cross the traditional
'civil-criminal' divide - which sees the purpose of the
criminal law as being to punish individuals for public
wrongs, and the purpose of the civil law as being to
compensate individuals for private wrongs.
The penalties cross this divide because they bring the State
into civil proceedings with the aim of punishing the offender
(rather than compensating the victim). The primary rationale for
such punishment is to set an example and to discourage further
But, although they resemble criminal sanctions in notable
respects (i.e. by being public and punitive in nature), civil
pecuniary penalties do not afford defendants the same procedural
protections enjoyed by the accused in a criminal trial.
This is despite the fact that:
the sums involved can be significant, and in many cases much
greater than the maximum financial penalties under the criminal
the reputational harm can be as great or almost as great as
that caused by criminal sanction.
Differences in procedural protections
The criminal law has comprehensive procedural protections to
safeguard an accused from abuses of State power. These include:
proof 'beyond reasonable doubt'
strict rules of evidence
the accused's right to silence, and
the presumption of innocence.
Criminal offences also generally require evidence that the
accused was morally culpable, by having a certain 'mental
element' in relation to the prohibited act or omission –
such as knowledge or intent.
The civil law has far fewer protections. This is largely because
civil disputes occur between relatively evenly-matched, private
individuals, protecting their private interests. It follows that
civil litigants only have to prove matters to the standard of
'balance of probabilities', they do not generally have to
be morally culpable, and do not have the comprehensive procedural
protections necessary to protect against abuses of State power.
Overview of the Issues Paper
The Issues Paper seeks feedback on:
procedural and evidential rules
standard and burden of proof
privilege against self-exposure to a non-criminal penalty
intention and defences
terminology and classification of civil pecuniary
imposition of civil pecuniary penalties by non-judicial
instigation of proceedings
when to impose a civil pecuniary penalty and the level of that
limitation periods for commencing proceedings
whether the Law Commission should recommend guidance to policy
whether a specific legislative framework for civil pecuniary
penalties should be introduced.
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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