Appendix 2
Non-criminal penalties in other jurisdictions
Australia
Civil penalties are an established part of the Australian regulatory landscape at both state and federal level, and cover broader areas of the law than in New Zealand. They are found for example in competition law, company law, environmental law, superannuation, telecommunications and anti-spam legislation. As in New Zealand, they are imposed in judicial proceedings.
Their use is growing, for instance the Competition and Consumer Act 2010 (Cth) relies heavily on civil penalties. They have also (along with administrative penalties) been the subject of a comprehensive review by the Australian Law Reform Commission (ALRC), commenced in 2000 (see below). In general, they tend to have attracted a greater degree of scrutiny and interest from various quarters.
As in New Zealand their place in the regulatory regime varies. In some Acts they are the sole enforcement mechanism (along with other civil orders) and in others they provide a parallel enforcement mechanism (alongside criminal penalties) for less egregious, non-intentional contraventions. The quantum of maximum penalties varies between regimes. Notably, many Australian regimes frame their penalties as “units” defined under the Crimes Act 1914 (Cth). Section 4AA of that Act currently fixes a penalty unit at AD$110.
The procedural provisions of the civil penalty regime in the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) have been put forth as a proposed model capable of being applied to a range of civil penalty regimes by the Attorney-General's Guide to Framing Commonwealth Offences, Civil Penalties, and Enforcement Powers (2007 edition). The guide defines a civil penalty; gives guidance on when they are appropriate; how they should be framed; their procedural provisions; and guidance for determining quantum. However, the 2007 edition of the guide is not routinely followed. For example it recommends including a provision to the effect that the court must apply the civil rules of evidence and procedure in civil penalty proceedings; but this is not explicitly stated in the Australian Consumer Law (contained in schedule 2 of the Competition and Consumer Act 2010 (Cth)). The guide has now been replaced and no longer deals with civil penalties.
In 2002 the ALRC published its final report on the use of administrative and civil penalties in Commonwealth legislation. The report was broad in scope and covered civil, administrative and quasi-penalties (such as the removal of a licence or benefit) in a number of regulatory fields. The ALRC’s essential task was to identify areas in the many disparate federal regulatory and penalties schemes where greater clarity, transparency and consistency could be introduced.
Among other things, the ALRC report considered whether a “hybrid” approach should be created for civil penalty proceedings, but most submitters preferred to maintain the traditional criminal-civil divide. Ultimately the report recommended that civil penalty regimes state that the usual civil rules of procedure would apply in civil penalty proceedings. It did not specify when heightened procedural protections should apply – for example, when the court should recognise the common law privilege against self-exposure to a penalty – noting the role of judicial discretion in upholding procedural fairness depending on the particular facts and circumstances.
The report’s overarching recommendation was to enact a Regulatory Contraventions Statute to govern the creation and use of all civil and administrative penalties, in the absence of express legislative provision to the contrary. This was intended to introduce underlying principles and greater consistency without imposing a “one size fits all” approach. Ultimately no statute was ever enacted, although many of the report’s individual recommendations were incorporated into a section of the Attorney-General’s Guide to Framing Commonwealth Offences, Civil Penalties and Enforcement Powers, from 2004 until 2010.
Use by regulatory agencies
Some Australian regulatory agencies have well-developed policies and approaches towards their use and enforcement of civil penalties, such as the Australian Securities and Investment Commission (ASIC) and the Australian Competition and Consumer Commission. These agencies are tasked with overseeing significant civil penalty regimes and both publish relatively comprehensive enforcement policies on their websites. For example, ASIC makes enforcement decisions based on the seriousness of the conduct and to maximise the available remedies. It also discusses how it decides when to refer cases to the Commonwealth Director of Public Prosecutions and publishes its memorandum of understanding with that body.
ASIC in particular has come under some scrutiny from academics, the media and the general public in terms of its use of civil penalties. Some academics have taken the view that ASIC has under-used civil penalties in favour of criminal prosecutions (see further below). At other times when ASIC has chosen civil over criminal proceedings, it has been obligated to defend its choice in the public arena, in face of concerns that it is soft on crime.
Role of the courts
As a court-imposed regulatory tool, civil penalties in Australia have been subjected to robust examination by Australian courts. While the courts have not so much questioned their legitimacy, they have taken a clear stance on their punitive nature, at least where penalties against individuals under the Corporations Act are concerned. In taking this approach, Australian courts have determined that certain procedural protections should apply in civil penalty actions, or that certain processes may need to be followed to ensure fairness. Judges have made a number of decisions or statements favouring the imposition of certain procedural protections, including:
- That those defending civil proceedings for a management ban can rely on the common law privilege against self-exposure to a penalty and so can limit their disclosure accordingly;
- Implying a duty of “prosecutorial fairness” on the enforcement body in its pursuit of civil penalties;
- Inhibiting the enforcement body’s ability to combat limits on defence disclosure by taking a “quasi-criminal” approach to whether it can adduce additional evidence after its case is closed, and
- Relying on the Briginshaw v Briginshaw test for determining the level of proof required by the court before a finding that a contravention has been made out, which states that the strength of the evidence needed to prove facts on the balance of probabilities varies according to what is to be proved.
These protections are considered in more detail in chapter 6 of this Issues Paper.
Australian academics appear to accept civil penalties as a legitimate form of regulation. This may be because theories of strategic and responsive regulation have gained particular traction in Australia, both in legal and policy development and among academics. Civil penalties did come under some criticism in Australia in the late 1980s and early 1990s (Tony Greenwood described them as a “noxious hybrid”). But more recent commentary focuses less on the question of their legitimacy and more on how they are formulated and how the courts have interpreted them. Writing in 1994, Gillooly and Wallace-Bruce concluded that their use would, and should, increase in the years to come. We have not identified a strong voice objecting to civil penalties in the academic literature.
Indeed, the robust judicial approach towards many civil penalties has led some academics to remark that the courts are favouring criminal process values to the detriment of the regulatory rationale of civil penalties. This has led to calls from some for a governing procedural statute to deal with civil penalty formation and imposition, and creation of a third or middle way departing from the traditional criminal-civil division of the law.
ASIC’s use of civil penalties has come under particular academic scrutiny and empirical study. Michelle Welsh has suggested that ASIC’s default stance is to refer cases for criminal prosecution, and that this diminishes the effectiveness of civil penalties and fails to reflect the policy of “responsive regulation” that led to their insertion in the Corporations Act in 1993. She has suggested ASIC should reserve its use of criminal penalties and institute civil proceedings more frequently than it has done in the past.
