Contents

Chapter 12
Rules of procedure

12.1In the Issues Paper, we noted that New Zealand statutes differ in their treatment of the procedural and evidential rules that apply to pecuniary penalty proceedings. Some are silent on the issue. Five, including section 509 of the Financial Markets Conduct Act 2013, contain a common provision relating to pecuniary penalty proceedings:

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).

12.2The Commerce Act 1986 takes a different approach. Section 79A provides that “[i]n any proceedings under this Part for a pecuniary penalty … (b) the Commission may, by the order of the Court, obtain discovery and administer interrogatories.”

12.3The 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 to the Commerce Act. None of these four Acts contain the Financial Markets Conduct Act formulation.

12.4In addition, section 79 of the Commerce Act provides:

In the exercise of its jurisdiction under this Part, except in respect of criminal proceedings and proceedings for pecuniary penalties, 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.

12.5That section implies 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, section 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.

12.6In all proceedings under that Act, then, the relaxed rules apply. Given the nature of pecuniary penalty proceedings, this provision is inappropriate. We note that it is to be repealed on 1 April 2017, or on an earlier date to be appointed by Order in Council, and that the Financial Markets Conduct Act, which will replace the 1988 Act has, quite rightly, omitted the provision.

12.7The intent behind these variations, and the implications (if any) of the different approaches are not clear. In the Issues Paper, we raised two concerns about a formulation like that of section 509 of the Financial Markets Conduct Act. First, such a broadly framed provision could invite a number of interpretations and consequent procedural challenges, which may add cost and delay to pecuniary penalty proceedings. We asked what, for example, does the term “usual” imply? Is it possible to identify what the “usual rules of evidence and procedure for civil proceedings” are? Alternatively, is the term “usual” a qualification? That is to say, must it be the “usual” rules rather than the exceptional or unusual rules of civil procedure that are used? Similar concerns have been influential in the debate about the need for uniform procedural rules in Australia, and a United Kingdom commentator has observed:250

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.

12.8Secondly, we considered whether New Zealand should share concerns expressed in Australia that lack of certainty in the formulation might mean a default to overly-broad “quasi-criminal” protections.

12.9We asked whether more specific direction should be provided about procedure for pecuniary penalties, rather than the broad section 509 formulation. We also asked whether consistency was desirable across the pecuniary penalty statutes, and if so, how it was to be achieved.

12.10An additional question is whether the application of all of the standard civil rules is appropriate in any event. It may be excessive to require all of the steps that generally take place in standard civil proceedings for this type of matter. In simple terms, in a pecuniary penalty proceeding, an allegation is brought and facts are presented to support it, all of which should be openly disclosed to the defendant. It is then up to the defendant to decide whether to concede the allegation or defend it. On concession or a finding of liability, the matter moves onto appropriateness of penalty. Given the relative simplicity of this process, it may be that a more streamlined set of rules would be appropriate.

250RM White “It’s not a criminal offence–or is it? Thornton’s analysis of ‘penal provisions’ and the drafting of ‘civil penalties’” (2011) 32 Statutes LR 17 at 36.