10.15The rule against double punishment bars the imposition of more than one penalty for the same conduct and so protects citizens against the oppressive use of State power. The principle makes no distinction based on the gravity of the penalty. That is to say, the fact that pecuniary penalties are not accompanied by a criminal conviction is irrelevant. It is enough that they are punitive in nature. Our approach to double jeopardy starts from the premise that pecuniary penalties involve the imposition, through the court process, of a punishment that is sought on behalf of the State. In this regard, pecuniary penalties are substantially similar to criminal penalties.
10.16In our view, it follows from this that, in principle, a bar should be placed on double punishment by the imposition of a pecuniary penalty and criminal penalty in relation to the same conduct. This view is supported by the approach of the majority of the Court of Appeal in Daniels v Thompson, which applied the rule against double jeopardy to bar an award of exemplary damages where punishment has already been exacted under the criminal law. The nature of an award of exemplary damages, being to punish and deter, was central to the Court’s decision.
10.17The nature and function of pecuniary penalties also distinguishes them from other instances where the double jeopardy principle has been held not to apply. They differ, for example, from proceedings before disciplinary bodies, which both the Court of Appeal and Supreme Court have stated do not give rise to double jeopardy concerns. For example, in Daniels v Thompson, the majority of the Court of Appeal observed that:
The powers of disciplinary bodies are prime examples…. Breach of a code of conduct can properly bring consequences additional to those imposed by the criminal Court. It has long been held that the striking off of a solicitor convicted of a criminal offence was not an additional punishment for the offence…. Such cases as these do not involve the imposition through the Court process of a second punishment. These are examples of a different principle, that where a particular status is granted a person particular obligations are imposed appropriate to that status, which if breached bring their own consequences.
10.18Pecuniary penalties are different to protective orders or more minor penalties imposed by a body of professionals on one of their peers. They are public in nature, and are intended to deter and denunciate law-breaking conduct.
10.19Our view is also strengthened by the fact that pecuniary penalties tend to feature in regimes that have a dedicated enforcement agency. The agency is charged with overseeing the regime, investigating potential breach, and, where they have the choice, exercising enforcement decisions about whether evidence of a breach supports commencing pecuniary penalty or criminal proceedings. One would expect that, generally, such a body should be in a position where it can exercise those enforcement decisions in a well-informed and responsible manner. Subject to the discussion from [10.22] below, we find it difficult to see why such an agency would ever wish to seek both forms of penalty against a defendant.
10.20We note submitters’ concerns that a bar on double punishment might have an undesirable impact on the exercise of prosecutorial decision-making. We do not think that this is an adequate basis on which to sidestep the principle. The extent to which protecting defendants from double punishment will have a perverse effect on enforcement decisions in New Zealand is not clear. Most pecuniary penalty proceedings have been taken under the Commerce Act 1986. That Act provides clearly that where the Commerce Commission has the option of which route to take, once criminal proceedings are “determined”, a pecuniary penalty cannot be imposed and vice versa. We are not aware of any evidence that this provision has had an undesirable effect on prosecutorial decision-making. Furthermore, the provision will be retained and extended to the enforcement of the new cartel provisions by the Commerce (Cartels and Other Matters) Amendment Bill.
10.21In our view, we should expect our enforcement agencies to exercise a high standard of care in their prosecutorial decision-making. This will be assisted as understanding and experience of pecuniary penalty proceedings grow, and by the use and public release by agencies of enforcement guidelines. The Commerce Commission is guided in its enforcement decisions by its Enforcement Response Guidelines, which are publicly available on its website.
A pecuniary penalty and imprisonment?
10.22Notwithstanding the above, there is a particular question whether, given their different nature, both the imposition of a pecuniary penalty and imprisonment should be allowed for the same conduct. As noted above, some submitters supported this idea on the basis that a feature of the breach might subsequently come to light that warrants the imposition of the additional punitive and protective measure of imprisonment.
10.23It is possible for a court to impose both a fine and imprisonment following a single conviction. Section 19(1) and (3) of the Sentencing Act 2002 provide:
(1) No court may impose a combination of sentences of different types on an offender in respect of 1 or more offences except as provided in this section.
(3) A sentence of a fine may be imposed with any sentence, but may only be imposed with a sentence of imprisonment in respect of a particular offence if authorised by the enactment specifying the offence.
10.24It is not uncommon for statutes to provide for this. For example, the offences in the Financial Markets Conduct Act 2013 relating to defective disclosure and false statements all provide for the imposition of a term of imprisonment, a fine, or both. Other examples of statutes that provide expressly for both imprisonment and a fine are sections 98C and 98D (people smuggling), section 6(4A) (dealing in Class A and Class B controlled drugs) and section 12AB (importing precursor substances) of the Crimes Act 1961, and section 27 (general penalty) of the Misuse of Drugs Act 1975. In these circumstances, a combination of a fine and imprisonment must normally accord with the totality principle, and reflect the overall criminality of the offending.
10.25A key difference, of course, with the proposition of the imposition of a pecuniary penalty plus imprisonment, is that it would entail two sets of proceedings. In contrast, dual penalties of criminal fine and imprisonment under the statutes listed directly above would only entail one criminal trial.
10.26Also, there is a strong argument that the scenario raised by submitters differs little from one where successful criminal proceedings have resulted in the imposition of a comparatively low fine or a short prison sentence, and where evidence becomes available that the offending was in fact graver than appreciated at trial. In those circumstances the prosecutor has no scope to try again to obtain a stronger penalty. It is true that the Criminal Procedure Act 2011 allows for a second trial in very limited circumstances, but this is only possible after an acquittal.
10.27In the usual course of events, we cannot see a justification for seeking both imprisonment and a pecuniary penalty. We agree that the same form of conduct can be carried out with varying levels of culpability, so that sometimes a pecuniary penalty will be appropriate, and sometimes imprisonment will be appropriate. However, generally it would be preferable that this assessment is carried out before the enforcement route is chosen.
10.28Having said this, the Commission is alert to the concern that this scenario cannot be entirely ruled out. There may be rare cases where a pecuniary penalty has been imposed, but where it subsequently becomes clear, perhaps because of fresh evidence, that the breach was of such a serious and blameworthy nature that imprisonment is warranted. We anticipate that those circumstances would be very uncommon. PCO suggested that this should only occur if there was a clear distinction between the elements of the civil and criminal liability provisions (such as the need for knowledge/intention for criminal liability). We think the imposition of both imprisonment and a pecuniary penalty should be allowed in far more restricted circumstances than this. A number of existing pecuniary penalty statutes provide for parallel criminal offences and pecuniary penalties, with the distinction being made on the degree of knowledge/intention required, but they make it clear that a pecuniary penalty and imprisonment cannot both follow.
10.29In our view, the possibility should only arise in relation to specific breaches under a statute that could capture a broad range of conduct stretching genuinely from the truly inadvertent that results in no harm, to intentional breaches carried out in the knowledge that substantial harm might result. For these types of breaches, a case may be made that a pecuniary penalty ought to be followed by imprisonment if subsequent evidence comes to light. Again, it is preferable that this matter is considered openly in the policy process, and is provided for specifically in the statute. The risk of potential challenges in court on the basis of double jeopardy will be minimised if the statute is clear. However, if a statute is silent on this question, or indeed any aspect of double jeopardy, we encourage courts to adopt our assessment of the nature of pecuniary penalties in any consideration as to whether subsequent proceedings and/or penalty would offend against the principle, and should be struck out as an abuse of process. We note that the Supreme Court considered the appropriate approach to questions of abuse of process on the grounds of double jeopardy in Z v Dental Complaints Assessment Committee. As discussed above, we consider that pecuniary penalty proceedings present different features to the disciplinary proceedings dealt with in that case.
10.30There is no reason to expect that courts would not apply the totality principle to sentencing where a second penalty of any form is sought. It follows that in the scenario dealt with above, the pecuniary penalty should be taken into account in the setting of the term of imprisonment.
10.31To an extent, where a statute bars the imposition of a double penalty, it deals with the question of double proceedings. Once a penalty has been imposed in one jurisdiction pursuing penalty proceedings in the other would be pointless. However, three questions remain:
(a) What should be the position if the first proceedings were unsuccessful?
(b) What should happen under statutes that provide for other civil orders?
(c) Should statutes address the question of whether and when proceedings should be stayed?
What should be the position if the first proceedings were unsuccessful?
10.32It seems unlikely that unsuccessful pecuniary penalty proceedings would be followed by criminal proceedings, given the elevated standard of proof for the latter. However, if criminal proceedings have been determined, but breach could not be established to the criminal standard, should enforcement agencies be able to have a “second bite at the cherry” and seek instead a pecuniary penalty, established on the lower civil standard of proof? In its 2002 review of civil and administrative penalties, the Australian Law Reform Commission considered that this should be allowed because regulators would benefit from the flexibility of being able to pursue two sets of proceedings.
10.33It is not clear to us how regulatory effectiveness is impeded by a regulator being prevented from pursuing two sets of penalty proceedings. Regulators benefit from flexibility in that they can opt between criminal and pecuniary penalty proceedings (where those options exist). And while it may be true that a regime that has a low success rate in the punishment of breach might suffer from a commensurate reduction in effective deterrence, any connection between a low success rate and a lack of ability to take two sets of penalty proceedings is not obvious.
10.34The question is whether, having been pursued through the courts by the State for one form of penalty, a defendant should be required to defend itself from further State-initiated penalty proceedings for the same conduct. In general, we do not think they should. The double jeopardy principle will be best upheld by a statutory bar on this, as provided in some existing pecuniary penalty statutes. We suggest that policymakers should consider providing for such a bar in pecuniary penalty statutes.
10.35Again, where there is no statutory bar, we anticipate that if an application is made to strike out the second proceedings as an abuse of process on double jeopardy grounds, the courts will make their assessment based on the nature of pecuniary penalties as we have described them in this Report.
Statutes that provide for other civil orders
10.36As noted, some pecuniary penalty statutes provide for proceedings to establish civil liability more generally. A finding of civil liability (for example, resulting in a “declaration of contravention”) may result in the award of a number of orders, including pecuniary penalties, compensation and management bans.
10.37Concerns that a strict statutory bar on double proceedings may prevent or inhibit the award of these other civil orders are valid. Clearly this outcome would be undesirable. It does not accord with the fact that the double jeopardy rule does not place a bar on civil claims in other circumstances.
10.38One would expect then that statutes employing this model, while they should usually provide for a bar on the imposition of two penalties for the same conduct, will not provide for a statutory bar on both civil liability and criminal proceedings taking place. Again, it would be for the court to assess whether any subsequent proceedings amounted to an abuse of process; and to determine whether one set of proceedings should be stayed until the other is completed.
Stays of proceedings
10.39At present, pecuniary penalty statutes vary on the question of whether, in the event of double proceedings, the civil proceedings become automatically stayed by virtue of the statute, or whether the question of a stay should be at the discretion of the court. On this question, PCO did not think there was a need for a mandatory stay. It considered it was best left to the courts to determine whether there was a danger of injustice in the particular case, rather than having a blanket legislative rule. Meredith Connell agreed and thought in some situations a stay of civil proceedings might not be appropriate.
10.40The Ministry of Business, Innovation and Employment (MBIE) noted that a key reason for having a stay was to prevent the prosecuting regulator from gaining additional information under the rules of civil procedure that would not be accessible in a criminal proceeding. It characterised this as, in essence, a self-incrimination problem. MBIE preferred that the issue be dealt with by restricting the use of evidence obtained from civil proceedings in criminal proceedings.
10.41We have no objection to statutes that do provide for an automatic stay of proceedings. Nor do we object to the question of the courts being left to exercise their discretion on whether to stay civil proceedings pending the outcome of a criminal trial because of the risk of prejudice to the defendant. As noted above such a stay may be justified because of the civil court’s exploration of the evidence going to civil liability, as well as because of the potential imposition of second penalty. Because of this, the potential for compensation claims to be delayed exists in any event.
10.42The orthodox approach to double jeopardy issues in criminal proceedings is to focus on the similarity of the offences , rather than whether the two offences sought to be charged arise out of the same facts. As Butler and Butler note, the language of section 26(2) of the New Zealand Bill of Rights Act suggests that the protections it offers only apply where a person faces trial or punishment for the same offence as that upon which he or she was previously finally acquitted, convicted or pardoned. However, under section 358(1) of the Crimes Act 1961, the protection extends to cases when the accused is charged with a matter which is the “same in whole or in part” as a previous offence. As Butler and Butler also note, there is a substantial volume of New Zealand case law on the interpretation of this phrase, which emphasises that the focus should be on the similarity of the offences, rather than on the fact that they arise out of essentially the same facts.
10.43By contrast, pecuniary penalty statutes tend to focus on the similarity of the conduct or acts targeted. Therefore, if the imposition of multiple penalties or sanctions are said to be barred by statute, the focus will be on the factual acts, matters or transactions in the particular case.
10.44The position is complex where the regulator seeks a number of separate penalties for a series of related acts or transactions that all took place in a short timeframe. Questions are likely to arise about whether these should be characterised as one course of related conduct, or whether each act is a separate contravention. If a penalty were imposed in respect of each separate contravention, would this amount to imposing multiple penalties for the “same conduct”? This is the formulation used by a number of pecuniary penalty statutes, but other statutes refer to “substantially the same conduct”; “the same or substantially the same act or omission”; the same “conduct, events, transactions or other matters” or the same “contravention”. All of these approaches could raise difficult questions of statutory construction.
10.45This was the issue in Commerce Commission v Accent Footwear in respect of multiple pecuniary penalties sought for five separate acts relating to resale price maintenance, which occurred within a number of months. The Commission argued that each was a contravening act. The defendant argued that the acts in aggregate amounted to the “practice of resale price maintenance” prohibited by section 37(2) of the Commerce Act 1986, and therefore amounted to the same conduct for which a single penalty should be imposed. Williamson J viewed each as a separate act, but took a totality approach drawn from the criminal law, viewing all the contraventions in the round and imposing penalties to reflect the overall position.
10.46Given that issues are likely to arise about the similarity or otherwise of conduct, acts and transactions in issue, pecuniary penalty provisions need to be drafted clearly. Thought should be given to whether a series of related acts constitutes “the same conduct” and if so, how this may be expressed in legislation. There is a question as to what is implied by the different formulations set out in [10.44] above. To a substantial extent, what amounts to the same conduct or same contravention will be a context-specific assessment dependent on the actual breaches and conduct under consideration in a particular case. However, it seems clear to us that, over time, the courts’ task in interpreting such provisions would be assisted by a consistent approach to the drafting of double penalty and proceedings provisions in pecuniary penalty statutes. We do not hold a strong view as to which formulation is to be preferred. However, we suggest that, where possible, drafters should employ consistent terminology in the future.
10.47An example of a provision that addresses these matters in greater detail (although for criminal offences, not pecuniary penalties) is section 214 of the Australian Consumer Law, under the Competition and Consumer Act 2010 (Cth). That provision mitigates the risk of double punishment at penalty setting stage, by limiting the penalty a court may impose where a person is convicted of more than one offence which “appear to the court (i) to have been of the same nature or a substantially similar nature; and (ii) to have occurred at or about the same time”.
G7 Policymakers must consider how the pecuniary penalty statute will deal with “double jeopardy”
Given their punitive nature, pecuniary penalties can raise double jeopardy concerns.
Pecuniary penalty statutes should usually:
(i) prohibit a person being punished by the imposition of both a pecuniary penalty and criminal penalty, or by more than one pecuniary penalty, for the “same conduct”; and
(ii) provide that once criminal proceedings have been determined (whether successfully or otherwise) there should be no pecuniary penalty proceedings based on the same conduct, and vice versa.
Consideration will need to be given to how a statute deals with double jeopardy where:
(i) The regime will allow for a range of orders to follow from a finding of civil liability or “declaration of contravention”. In such regimes it may be appropriate for questions of double jeopardy to be left to the court to determine.
(ii) A case can be made that the statute may allow for the imposition of both a pecuniary penalty and a sentence of imprisonment for the same conduct. The potential for such double punishment should be possible only in relation to specific breaches under the statute that can genuinely capture a broad range of conduct, from inadvertent conduct that results in minimal harm, to intentional conduct carried out in the knowledge that substantial harm might result. The statute should provide expressly for this.
Where possible, drafters should employ consistent terminology in dealing with the question of the “same conduct”.