Chapter 5
Design of civil pecuniary penalties – guiding principles

5.1What factors should guide the design of civil pecuniary penalties? They are not criminal sanctions, so it seems clear that traditional criminal procedures should not apply. However, if our analysis of their nature is to be accepted, there is a question whether traditional civil procedures should be used in their imposition. To put it another way, should conventional civil procedural rules be applied to what might be considered unconventional civil law?179  Writing in 1992, Kenneth Mann argued for the acceptance of a “middleground” procedural approach to civil pecuniary penalties that would draw on the criminal law and civil law “to form a hybrid jurisprudence in which the sanction’s purpose is punishment, but its procedure is drawn primarily from the civil law”.180

5.2At present, this “middleground” is being worked out on an incremental basis by courts in other jurisdictions with forms of civil penalty. Thus far, New Zealand courts have shown little apparent discomfort with the nature of civil pecuniary penalties. However, as the field of such penalties expands and the likelihood of more vigorous defence of civil pecuniary penalty proceedings increases, this could change. In chapters 6 and 7 we consider in detail the procedure for the imposition of civil pecuniary penalties and other aspects of their legislative design. We also consider the extent to which it is desirable for courts to, over time, develop a “middleground” jurisprudence or whether there should be greater legislative direction about how civil pecuniary penalties should be imposed.

5.3In tackling these questions we have sought to balance appropriately the following considerations:
(a) fairness;
(b) the need for effectiveness in the enforcement of regulatory regimes; and
(c) the interest in certainty.
5.4Before we set out what we understand by each of these considerations, it is worth observing again that decisions about the procedure for civil pecuniary penalties might be influenced by the circumstances of their use. Civil pecuniary penalties have been designed at least in part because of the difficulties of proving breaches by corporate bodies and concerns about the effectiveness of the criminal law in deterring corporate offending. Are the same compromises justified for individuals?181  If a decision is made that they should be embraced for a wider field of conduct, should their design be different?
179T Middleton “The Difficulties of Applying Civil Evidence and Procedure Rules in ASIC’s Civil Penalty Proceedings under the Corporations Act” (2003) 21 C&SLJ 507 at 516 and K Mann “Punitive Civil Sanctions: The Middleground Between Criminal and Civil Law” (1992) 101(5) Yale LJ 1795 at 1798.
180Mann, above at 1799. And see at 1813: “… the paradigmatic criminal process and the paradigmatic civil process accurately describe only part of the empirical arena of sanctioning processes. They fail to capture the special combination of punitive purposes and civil procedural rules that characterizes hybrid sanctions, which occupy a vast middleground between criminal and civil law. The middleground is not sui generis in the sense that it possesses distinctive characteristics found in neither of the paradigms; rather, it mixes the characteristics of these paradigms in new ways.”
181See I Rosen-Zvi and T Fisher “Overcoming Procedural Boundaries” (2008) 94 VA L Rev 79, where the writers argue that the design of court procedures should be influenced by the relative strength of the opponents.