The nature of civil pecuniary penalties
Is there anything wrong with a “hybrid”?
3.28There is a view that the State should not impose penalties through civil processes. Such a view would hold that civil procedure has not developed with the imposition of penalties in mind and, so, it is not suited to the task. Viewing it another way:
The extraordinary procedural protections surrounding the criminal sanction are sensible only on the assumption that the criminal law is unlike other bodies of law … the criminal law is different in that it subjects persons to state punishment.
3.29An alternative view is that any rigid description of the criminal-civil divide fails to reflect reality. As Rosen-Zvi and Fisher put it:
The civil-criminal procedural dichotomy is inappropriate for the realities of the twenty-first century. Even assuming that, in some distant past, at the time the civil-criminal divide was set—when criminal law was much “thinner” and institutional actors as well as the government were less involved in civil litigation—it corresponded to the values underlying procedure, this is no longer the case.
3.30The Commission agrees that the divide between the two is not absolute. The distinction is blurred in a host of ways neither imprisonment nor jury trial have ever been entirely alien to the civil sphere; As noted in chapter 1, the sentence of reparation, handed down by criminal courts, is designed to compensate the victim; courts have long recognised that the civil law may have a punitive function through the remedy of exemplary damages; and, civil pecuniary penalties have existed in disciplinary statutes for many years.
3.31Also, the growth in infringement offences – which do not result in a criminal conviction if the offender pays the prescribed fee – has seen the decriminalisation of a considerable amount of minor offending. The adoption of such infringement or administrative offence regimes, with low penalties, is used widely in some European countries as a way of dealing swiftly, effectively and fairly (or “not-unfairly”) with non-serious wrongdoing.
3.32The growth of regulation has also seen the criminal law expand into what were previously civil violations. Increased use of strict liability offences for regulatory or administrative infractions means that there is “a mountain of new ‘crimes’ that carry no moral condemnation”. While strict liability offences are not a “hybrid” in that prosecution and conviction follow, they are an example of where traditional criminal precepts have been compromised for policy imperatives.
3.33So there is a strong argument that the test of punishment alone is already a “jurisprudentially unsatisfactory” way of determining what should be subjected to full criminal process and protections and what should not. Hybrids already exist and have for some time.
3.34Furthermore, a pragmatic view is that developments such as the growth in infringement and regulatory or “public welfare” offences are an inevitable and sensible response to the demands of an increasingly complex society. They are examples of how our justice system has been adapted to meet changing needs. Being open to such adaptations is necessary if we are to retain an effective, proportional and flexible legal system.
3.35Our justice system needs to respond in more sophisticated ways because it regulates a broader range of conduct. For example, we have greater expectations about public safety, standards of service and professional behaviour than in the past. Breaches of those standards may be undesirable but they may not be so grave as to demand criminalisation. The characteristics of a particular form of behaviour that lead us to outlaw it today may not be the same as those that led us to criminalise conduct in the past.
3.36Society’s views of what conduct demands criminal punishment also change over time. Our understanding of what sorts of interventions are the most effective also develops. Criminal diversion, community-based sentences and initiatives such as the drug court pilot in Auckland are all examples of how the justice system is attempting to deal with criminal offending in a more targeted way.
3.37Proportionality also favours gradations of sanctions. Regulatory regimes deal with a range of behaviour, from minor, technical breaches to grave, intentional contraventions. If an enforcement body had only criminal sanctions at its disposal it would be prevented from taking a proportional approach to its enforcement activities and restricted to opting for the most costly sanction in terms of investigation and prosecution; with the greatest corresponding costs to business. To leave a State-funded regulator hamstrung with insufficient tools at its disposal would be to give the taxpayer poor value for money. There may also be further flow on costs: if a regulator can access only criminal sanctions it may be less likely to take prosecutions as frequently. In turn it may have a lower profile as a regulator and risks appearing weak. This is likely to make the regulated community consider its chance of getting caught and punished to be lower, reducing the deterrent effect of the regulatory system.
3.38Finally, arguments have also been made that the criminal law should remain the last resort. The distinction needs to be maintained to “prevent the dilution of the criminal law’s blaming function and maintain criminal punishment as an effective and powerful mechanism of social control”. On one hand, this argument has been used to defend the criminal law against hybrid actions, but there is also an argument that alternative ways of punishing breaches and obtaining compliance are desirable so that the criminal law can be retained for what society considers to be the most serious conduct.
The need for policy justification for hybrids
3.39In the Law Commission’s view, modern conditions mean that hybrids can be both necessary and desirable. However, they involve a compromise. Both criminal procedure and civil procedure have developed, in the particular contexts of their respective aims and consequences, with fairness in mind. Civil pecuniary penalties are punitive measures that represent a novel combination of those procedures, aims and consequences.
3.40In our view, where hybrids or compromises of the standard criminal or civil approach exist, there should be two forms of protection around their use. First, there needs to be robust analysis about and policy justifications for those compromises. It is accepted that there is a need to justify the criminalisation of conduct “by reference to democratic principles, and … sufficient reasons for invoking this coercive and censuring machinery against individual subjects.” Civil pecuniary penalties are also coercive and censuring machinery used by the State against its citizens, so similar justification should be required. The decision to use civil pecuniary penalties in a statute must take into account the fact that criminal procedural protections do not apply: the question is not so much about whether to punish, but whether it is justifiable to punish in this way.
3.41Secondly, the procedure for their imposition and protections around their use should be submitted to similarly rigorous analysis and justification, and fairness needs to be maintained. We discuss issues of procedure in chapters 6 and 7.
3.42Existing hybrids adhere to these two requirements. They are exceptional – that is they operate in limited fields – and there is an articulated policy reason for their use. To a greater or lesser extent, the procedure or protections accompanying them have also been worked out.
3.43For example, exemplary damages may now be imposed in very restricted circumstances in New Zealand. Justice Tipping described the limits of their legitimate operation in Couch v Attorney-General (No 2):
Exemplary damages are anomalous. Civil remedies are not generally designed to punish. The reach of exemplary damages should therefore be confined rather than expanded. Outrageousness is not a satisfactory sole criterion. The concept lacks objective content and does not contain sufficient certainty or predictability. Exemplary damages should be confined to torts which are committed intentionally or with subjective recklessness, which is the close moral equivalent of intention
3.44The implication from Couch is that, since exemplary damages are a form of civil punishment, the occasions for their award are limited. Furthermore, the majority of the Court of Appeal in Daniels v Thompson held that exemplary damages are not available where a defendant has been convicted of a criminal offence and sentenced (including being discharged), on the basis that this would entail double punishment.
3.45Infringement schemes provide another example. In the last 30 years they have become an essential means of ensuring effectiveness and proportionality in our justice system. In 2005 the Law Commission reported that infringement offences dealt with more than 2.5 million breaches of the law each year. A very large proportion of those are resolved between the defendant and prosecuting authority without the need for recourse to the court system. Because they compromise full criminal processes however, they are considered to be appropriate only in certain circumstances. The LAC Guidelines note that the infringement notice procedure is not suited for use in connection with:
- offences requiring proof of mens rea; or
- offences that are punishable by imprisonment; or
- offences that are not easy to establish (for example, offences relating to the breach of a general statutory duty requiring expert evidence).
3.46The LAC Guidelines also state that the procedure is best suited for those offences that are offences of strict liability; are committed in large numbers; involve misconduct that is generally regarded as being of comparatively minor concern by the general public; and involve acts or omissions that involve straightforward issues of fact.
3.47The trade-off involved in infringement offences is also recognised in that the LAC Guidelines state that “[t]he level of infringement fee should generally be less than $500”, and by the process for their imposition which is set out in statute: in return for accepting the penalty and so supporting the expediency of the process, the offender escapes criminal conviction. Furthermore, defendants retain the right to challenge an infringement notice, and to be prosecuted through normal criminal processes.
3.48Strict liability offences are also considered only to be appropriate in certain circumstances. A strict liability offence requires that the prosecution prove, beyond reasonable doubt, only that the conduct making up the offence has been carried out. The defendant’s subjective mental state is not relevant. The defendant has the burden of proving that, notwithstanding that the criminal contravention occurred and may be attributed to him or her, s/he is not at fault for it – either through establishing a specific statutory defence or through the common law defence of total absence of fault.
3.49In some instances, an offence is expressly drafted as a strict liability one. However, where an offence is silent as to mens rea, the courts have developed a number of factors to assist them in determining whether it might be categorised as a “public welfare regulatory” offence carrying strict liability. These factors are reflected in the LAC Guidelines, as follows:
An offence may properly be categorised as a strict liability offence (where there is no need for the prosecution to prove mens rea, but there is a defence if the defendant proves total absence of fault) if:
(a) the offence involves the protection of the public from those undertaking risk-creating activities. These offences (commonly described as public welfare regulatory offences) usually involve the regulation of occupations or trades or activities in which citizens have a choice as to whether they involve themselves; and
(b) the threat of criminal liability supplies a motive for persons in those risk-generating activities to adopt precautions, which might otherwise not be taken, in order to ensure that mishaps and errors are eliminated; and
(c) the defendant is best placed to establish absence of fault because of matters peculiarly or primarily within the defendant's knowledge.
3.50Strict liability offences still operate against the background of the NZBORA protections, notwithstanding the inherent encroachment on the presumption of innocence. In light of the limited sphere within which strict liability offences are considered appropriate, they are regarded, under s 5 of NZBORA, as a justified limit on the presumption of innocence.
3.51The Commission’s view is that there is a place for hybrid sanctions and procedures in the law. However, modifications to or compromises of the core legal tenets that mould our system of justice should be undertaken in the light of robust analysis and guided by principle. Civil pecuniary penalties represent a major shift in the way that the State controls and punishes illegal behaviour. Yet there has been little consideration and analysis of their nature and use. They are becoming increasingly popular, and we anticipate that they will be introduced to a growing range of legislation. There may be circumstances when they are inappropriate and undesirable. Furthermore, there may be areas of regulation that do not use civil pecuniary penalties that would benefit from their introduction.
3.52We propose, then, that guidance should be developed about the circumstances when civil pecuniary penalties may be justified or desirable, and when they should not be used. In the following chapter we consider what that guidance should say.