Other elements of legislative design
Instigation of proceedings
7.18Civil pecuniary penalty proceedings may be instigated only by the relevant enforcement body or agency. Civil pecuniary penalties differ from other civil remedies under the statutes. Any aggrieved person may apply for a compensatory order and any “entitled person” for a management ban under the Securities Markets Act 1988. Similarly, a range of persons (and any person, with the leave of the Court) can apply for civil remedy orders, injunctions and compensatory orders under the Takeovers Act 1993 but only the Takeovers Panel can pursue pecuniary penalty proceedings. Based on the current field of civil pecuniary penalties, in our view this approach should continue.
7.19The position differs for criminal offences: any person may commence a criminal proceeding. While the right to private prosecution can be confined by statute, this is rare. The right to private criminal prosecution has a long history in common law jurisdictions and is justified on the grounds that:
- It provides protection where a public prosecutor fails, for whatever reason, to exercise his or her discretion to prosecute: it plays a role, then, in the protection against the abuse of public power; and
- It provides an outlet for an individual’s need for vindication of personal grievances.
7.20The right is not absolute: the Criminal Procedure Act 2011 will formalise existing practice by providing that a District Court judge may require a private prosecutor to establish a prima facie case prior to accepting a charging document, or may refuse to accept it if it is otherwise an abuse of process. The provision is aimed at preventing vexatious and unprincipled private prosecutions from proceeding.
7.21The Commission does not consider that there is a strong argument for allowing persons other than enforcement bodies to commence civil pecuniary penalty proceedings. This is particularly the case where such proceedings are an alternative to criminal proceedings for a given form of conduct. There, potential claimants have other means of redress: they are able to pursue private prosecutions, standard civil proceedings and (in some cases) can apply for statutory compensation orders. The enforcement agency’s decision of whether or not to seek a civil pecuniary penalty will also be open to judicial review. These routes appear adequate for the vindication of any personal grievances and provide sufficient recourse in the event of a failure on the part of the enforcement body to act.
7.22There are other policy reasons which favour limiting the ability to commence such proceedings to the enforcement agency. That body has been created with the purpose of overseeing and enforcing the relevant regulatory system. It is resourced and given the investigatory powers to do so. In some cases, the civil pecuniary penalty procedure itself has been introduced as a proxy for other civil action where it is considered that, for various reasons, private individuals will not take private action themselves. In this type of regulatory context, the justifications that favour private prosecution are arguably less relevant.
7.23However, we query whether the position might be different if civil pecuniary penalties move further into the field of punishing traditional criminal behaviour. If civil pecuniary penalties were to replace criminal proceedings for a broader range of conduct, the justifications for private prosecution set out above may start to carry greater weight.
Q31 Are there any circumstances when individuals should be able to commence civil pecuniary penalty proceedings?
Declarations of contravention
7.24Some statutes provide for a process whereby, if a regulator applies for a civil pecuniary penalty, the Court must make a “declaration of contravention” in the penalty proceedings if it is satisfied that a contravention has occurred. Its purpose is to allow persons bringing later proceedings for compensation to rely on the declaration of contravention as conclusive evidence of the breach, so they do not have to re-establish it themselves. The declaration must state which provision was contravened, by whom, and the conduct that constituted the contravention. The declaration is therefore an additional mandatory Court order in certain civil pecuniary penalty proceedings. Whether the two orders are made in a single proceeding, or whether the Court makes an order for a declaration and deals with the question of penalty in later proceedings depends on the circumstances of the case.
7.25Where a third party can bring an action for damages or compensation based on the same conduct already addressed in a civil pecuniary penalty proceeding, it is sensible for the party not to have to re-establish the facts. The declaration of contravention process is not presently used under the Hazardous Substances and New Organisms Act 1996 and the Commerce Act 1986 but it might be equally appropriate there, and in other regimes.
Separating questions of liability and penalty
7.26Even where the statute does not provide for a “declaration of contravention”, current practice frequently sees the Court delivering separate judgments on liability and quantum. In numerous cases under the Commerce Act, the Court has made its finding on liability before considering penalty quantum: that is they have been treated as two separate endeavours. This is analogous to procedure in the criminal field, where a finding of guilt precedes the sentencing process (although both may take place in the same hearing). There is a question as to whether the “declaration of contravention” might also add something useful here. Should it be adopted as a matter of course in civil pecuniary penalty statutes merely as a useful tool or form of terminology that assists the Court in separating its decision on liability and penalty? This is not to suggest that two hearings must take place. Although, as occurs in the criminal field, this may be desirable to allow the parties to adduce further evidence as to factors that might impact on the penalty setting exercise.
Q32 Should all civil pecuniary penalty regimes provide for a declaration of contravention to be made?