Chapter 6

The critical issues

Procedural and evidential rules

The proceedings under this subpart are civil proceedings and the usual rules of court and rules of evidence and procedure for civil proceedings apply (including the standard of proof).

In any proceedings under this Part for a pecuniary penalty—… (b) the Commission may, by the order of the Court, obtain discovery and administer interrogatories.

6.5The Anti-Money Laundering and Countering Financing of Terrorism Act 2009, Dairy Industry Restructuring Act 2001 and Hazardous Substances and New Organisms Act 1996 contain identical provisions. None of these four Acts contain the Securities Act formulation. There is a question as to why it is has been thought necessary to provide specifically for discovery and interrogatories in some Acts? If the received wisdom is that civil pecuniary penalty proceedings are civil proceedings, discovery and interrogatories should occur as a matter of normal practice under the High Court Rules. What, then, is the import of s 79A(b), and what is the import of its omission from other civil pecuniary penalty statutes?

6.6There are further inconsistencies. Section 79 of the Commerce Act provides:

In the exercise of its jurisdiction under this Part of this Act, except in respect of criminal proceedings and proceedings for pecuniary penalties of this Act, the Court may receive in evidence any statement, document, or information that would not be otherwise admissible that may in its opinion assist it to deal effectively with the matter.

6.7That section provides that, in general under the Act, relaxed rules of evidence apply, but that the normal (stricter) rules of evidence apply in criminal proceedings and proceedings for pecuniary penalties. In contrast, while the Securities Markets Act 1988 also provides for enforcement by way of both criminal offences and pecuniary penalties, s 43V provides:

In the exercise of its jurisdiction under this Act, the Court may receive in evidence any statement, document, or information that would not be otherwise admissible that may in its opinion assist it to deal effectively with the matter.

In all proceedings under that Act, then, the relaxed rules apply.

6.8Two questions arise. First, should more specific direction about procedure for civil pecuniary penalties be given, rather than the broad Securities Act, s 57D formulation? Secondly, should we be striving for consistency across our civil pecuniary penalty statutes, and if so, how is it to be achieved?

The means of exacting the penalty in the case of criminal offences is the law of criminal procedure. This certainly contains variations and alternatives, most obviously the differences between summary and indictable/solemn procedures. However, it remains a more or less coherent whole, and applies to all criminal offences. Thus, their means of enforcement is well-known, standardized, and predictable, involving relatively clear procedures such as arrest, charging, caution, prosecution, guilty pleas, trial and appeal.

On the evidence of the three civil penalties examined, there is no more or less coherent standardised means of civil enforcement. Indeed the civil procedures differ substantially not only from those of criminal procedure but also among themselves.

6.10Civil pecuniary penalties are thought to be a speedy and efficient means of enforcement. Any savings and benefits that do in fact accompany them may be lost if their formulation leads to extended litigation. There may therefore be an argument for a greater degree of specificity and certainty than exists in s 57D. The other risk is that a lack of certainty will give courts the room to default to “quasi-criminal” protections. Again, this has been a concern in Australia.

6.11On the other hand, there are arguments that favour retention of the broad wording. It provides the Court with maximum flexibility, which enables it to ensure that the procedure adopted in the individual case is fair so that justice can be afforded. The ability to adapt procedure may be particularly warranted in the case of civil pecuniary penalties, given the potential gravity of the outcome for defendants and the range of defendants that may be involved. Civil courts have long had the discretion to adapt procedure accordingly and are well-versed in the practice. Also, where fairness requires that greater specification about particular rules of procedure or evidence is necessary, separate provision can be made. In this regard, see for example the discussion about the privilege against self-exposure to a non-criminal penalty, below.

6.12Another matter which favours a broadly worded procedural provision is the difficulty of identifying what any more specific wording would say. Thomas Middleton suggests that an Australian “code” should deal with matters such as:

• The standard of proof;
• The operation of the privilege against self-incrimination, the penalty privilege and any associated evidential immunities.
• The general principles on the availability (or otherwise) and scope of cross-examination in civil proceedings under the Corporations Act where there may be subsequent criminal proceedings.
• Whether the concept of “prosecutorial fairness” applies in civil pecuniary penalty proceedings, and provision as to matters such as the appropriate rules of disclosure.

• The legislative framing of civil penalty provisions, including fault elements, defences, maximum penalties and drafting style;
• Provisions such as who may impose a penalty, who may apply for one, limitation provisions, criteria for determining the amount of a pecuniary penalty;
• Persons involved in contravening civil penalty provisions (e.g. those who aid, abet, etc a breach; and derivative / collective responsibility);
• Gathering information for a pecuniary penalty proceeding;
• Issues around double jeopardy and subsequent or parallel criminal and civil proceedings;
• The status and drafting of declaration of contravention provisions.

Q4Should civil pecuniary penalty statutes contain a broad instruction to the effect that “civil pecuniary penalty proceedings are civil proceedings and the usual rules of court and rules of evidence and procedure for civil proceedings apply”?