The critical issues
Burden of proof
6.37The question of who carries the burden or onus of proof essentially determines who is responsible for convincing the court of a particular matter in proceedings. In both criminal proceedings and private civil actions, the legal burden of establishing the case is on the person who instituted proceedings (the prosecution or the plaintiff). This is also the case for civil pecuniary penalties. But various burdens may be carried in respect of a range of matters. Few statutes comprehensively address these matters so, where legal argument arises, the courts allocate the burden based on the elements of the cause of action, policy concerns and practical considerations.
What is the burden of proof?
6.38There are two burdens of proof. The legal burden refers to the duty carried by the person “who has the risk of any given proposition on which the parties are at issue – who will lose the case if he does not make this proposition out, when all has been said and done”. The evidential burden refers to the duty to raise, “on the evidence in the case, an issue as to the matter in question fit for consideration by the tribunal of fact”. The evidential burden does not prove anything, but only raises evidence sufficient to make an issue live.
6.39In criminal actions, it is clear that NZBORA applies. The presumption of innocence, protected by s 25(c) generally demands that the prosecution carries the legal burden of proving all the elements of an offence. The defendant can respond by attacking an element of the actus reus or mens rea (for example, claiming an alibi or mistake) and there is no evidential burden to discharge before the prosecution must address it. However the accused must discharge an evidential burden if s/he relies on a common law defence.
6.40If the accused relies on a statutory defence, at present he or she carries the legal burden in respect of offences tried summarily; but only an evidential burden in respect of indictable offences. This is by virtue of s 67(8) of the Summary Proceedings Act 1957, which provides:
Any exception, exemption, proviso, excuse, or qualification, whether it does or does not accompany the description of the offence in the enactment creating the offence, may be proved by the defendant, but, subject to the provisions of section 17, need not be negatived in the information, and, whether or not it is so negatived, no proof in relation to the matter shall be required on the part of the informant.
6.41This is understood to impose a legal burden on defendants in summary proceedings to prove the availability of any statutory defence. Prima facie this amounts to a breach of the presumption of innocence under NZBORA, and its general application across the statute book has raised concerns. Hence, the new Criminal Procedure Act 2011 will repeal s 67(8). Now, any criminal offence that puts the legal burden of establishing a defence on the defendant must state that clearly within the relevant Act.
6.42In private civil actions, the basic starting point is that the plaintiff, as the party that instigated the litigation, carries the legal burden of establishing the essential elements of the cause of action. The defendant may cast doubt on one of the elements of the cause of action, or may raise an affirmative defence (such as contributory negligence). In the latter case the defendant carries the legal burden in respect of that defence (but must only discharge that burden to the civil standard of the balance of probabilities). Hence in private civil actions the onus of establishing an affirmative defence is likely to be carried by the defendant, whereas for most criminal offences the presumption of innocence imposes this burden, prima facie, on the prosecution.
Burden of proof in civil pecuniary penalty proceedings
6.43Civil pecuniary penalty statutes rarely refer explicitly to who carries the burden of proof for a particular issue. However most penalty provisions suggest the enforcement body carries the burden of establishing the essential elements of the penalty, through their obligation to “satisfy” the Court of the contravention. For example, under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009:
90 Pecuniary penalties for civil liability act
(1) On the application of the relevant AML/CFT supervisor, the High Court may order a person to pay a pecuniary penalty to the Crown, or to any other person specified by the court, if the court is satisfied that the person has engaged in conduct that constituted a civil liability act.
6.44Burden of proof arguments may arise in respect of a range of matters at various stages of the civil pecuniary penalty proceeding (pre-trial; in the liability judgment; the penalty judgment; and on appeal). The Court will play an essential role in this. But it may also be possible for clear statutory drafting to minimise confusion and argument about who has to prove what in civil pecuniary penalty proceedings.
Establishing the ingredients of the civil pecuniary penalty provision
6.45The High Court has said that in proceedings under the Commerce Act 1986, the Commerce Commission must prove the facts on which the penalty “fundamentally rests”. The facts on which a penalty “fundamentally rests” will necessarily vary between regimes. The penalty provision itself provides the authoritative source for determining the ingredients of the cause of action. But some penalty provisions are framed in such a way that arguably creates confusion about what is an element of the cause of action (to be proved by the plaintiff). For example, s 156L of the Telecommunications Act 2001 states:
156L Pecuniary penalty
(1) The High Court may order a person to pay to the Crown any pecuniary penalty that the Court determines to be appropriate if the High Court is satisfied, on the application of the Commission, that—
(a) the person has failed, without reasonable excuse, to comply with a separation undertaking under Part 2A; or
(b) the person has failed, without reasonable excuse, to comply with an undertaking under Part 4AA; or
(c) the person has committed a breach of any of the provisions set out in section 156A.
6.46It is unclear from the face of the provision whether the absence of a reasonable excuse is a fact on which the penalty “fundamentally rests”, which must be proved by the enforcement body. The existence of a reasonable excuse could also be characterised as a defence which must be proved by the defendant. Similar drafting issues arise in criminal offences, and there the courts may take into account such matters as the underlying mischief at which the provision is aimed; practical considerations including the ease or difficulty the respective parties would have in discharging the burden of proof; and the structure of the provision – for example if the element in question does not appear in the clause creating the offence but in a subsequent provision, this may indicate Parliament’s intention to treat it as a defence.
6.47The similarity of drafting between civil pecuniary penalty provisions and offences suggests the Court may employ the same approach towards similarly ambiguous civil pecuniary penalty provisions. Notably, civil pecuniary penalties often target defendants who themselves hold the knowledge necessary to exonerate themselves from liability, a factor that would feature in the Court’s inquiry of whether a “reasonable excuse” is a statutory defence to be proved by the defendant. The Australian Law Reform Commission referred to this as one justification put forth for reversing the onus of proof in a civil pecuniary penalty provision. Other justifications discussed were that some contraventions may be considered so serious by the community that reversing the onus of proof is justified to ensure someone is found guilty and punished for it; where the contravention only affects a particular segment of society that is considered capable of safeguarding its own interests; and where it is felt necessary to overcome difficulties in assigning liability to certain parties.
6.48However, there is no test that can determine these matters before they arise, as the policy and practical considerations that persuade a court one way in respect of a provision using particular language will not necessarily have the same effect elsewhere, even where the same language is used. Commentary emphasises that these are matters that must be determined within the branch of the substantive law. This speaks strongly in favour of clear drafting of civil pecuniary penalty provisions and predictable, established language indicating clearly where the burden of proof lies.
Establishing a statutory defence
6.49A number of civil pecuniary penalty regimes contain statutory defences. Some of these, such as s 12 of the Unsolicited Electronic Messages Act 2007 (UEM Act), impose the burden of proving the defence on the defendant in very clear terms:
(1) A person who sends an electronic message, or causes an electronic message to be sent, in contravention of section 9, 10, or 11 has a defence if—
(a) that person sent the message, or caused the message to be sent, by mistake; or
(b) the message was sent without that person's knowledge (for example, because of a computer virus or a malicious software programme).
(2) A person who wishes to rely on a defence in subsection (1) has the onus of proof in relation to that matter.
6.50In other cases it may be inferred from the drafting of the provision. For example s 124B(3) of the Hazardous Substances and New Organisms Act 1996 (HSNO Act), states that the Court must not impose a penalty “if the person satisfies the court that the person did not know, and could not reasonably have known, of the breach”. Similar language is also used in s 41 of the Takeovers Act 1993.
6.51It is important that civil pecuniary penalty statutes indicate clearly who carries the burden of establishing a statutory defence. In its initial form, the Financial Markets Conduct Bill (342–1) did not make this clear. If it is not clear, arguments may be made that, as in the criminal law, imposing the burden of proving something on the defendant infringes their rights. If this is not the intention of the civil pecuniary penalty provision, it should be clearly stated.
6.52There are various other matters relevant to civil pecuniary penalty proceedings where burden of proof issues could arise, and where arguments may be made to adapt the orthodox position usually taken in civil proceedings. For example, who carries the burden in respect of:
- claims of privilege;
- statutory limitations or time limits;
- the similarity or otherwise of conduct pursued by a civil pecuniary penalty and by a criminal sanction, or by multiple civil pecuniary penalties;
- calculating the loss or gain made from a breach or damage caused by a breach, for quantum purposes;
- appeal rights.
6.53The question is whether, if these matters arise, the Court will allocate the burden of proof keeping in mind the quasi-punitive nature of civil pecuniary penalties and the possibility that defendants in these proceedings are under an additional disadvantage. Or will it address them as in any other civil proceeding? Introducing as much certainty as possible in the drafting of such provisions will minimise the need for legal argument on these issues.
Q6Do you agree that civil pecuniary penalty provisions should be drafted to maximise certainty over the allocation of the burden of proof?