Contents

Chapter 19
Crown and State sector defendants

Cabinet decision process – pecuniary penalties creating Crown liability

19.66As noted above, a Cabinet circular mandates a process that requires departmental analysis of the impact of new Bills on the criminal liability of the Crown.588 As is evident from this chapter, pecuniary penalties raise specific considerations in relation to Crown liability. Given the potential for pecuniary penalties to impose liability of a quasi-criminal nature on public sector defendants, and expose the Crown to substantial financial burden, we recommend that consideration be given to supplementing the Cabinet circular procedure to also require disclosure to Cabinet of the impact of new Bills on the liability of the Crown to pecuniary penalties.

Recommendation

R8 Cabinet should consider supplementing the current requirements in Cabinet Office Circular CO (02) 4 (“Acts binding the Crown: procedures for cabinet decisions”) to require departmental analysis of the impact on the liability of the Crown of legislative proposals to introduce pecuniary penalty regimes.

GUIDELINE

G21 Policymakers should consider whether the Crown and the State sector or parts of the State sector should be subject to a pecuniary penalty regime

To the extent that they participate in the activity regulated by the pecuniary penalty statute, the Crown, State sector or parts of the State sector should generally be subject to the statute; however this aspect of pecuniary penalty design should be considered on a case-by-case basis. Policymakers should consider the appropriateness of this form of penalty as an enforcement tool in the particular context and whether its application to the Crown and the State sector would be in the public interest.

The statute should state clearly whether it binds the Crown. It should also address the following matters:

  • What is meant by the Crown for the purposes of the statute?
  • Should the whole State sector or only parts of the State sector be subject to the regime?
  • How will liability be attributed?
  • Should public sector indemnities and immunities apply?
  • What procedures should apply?
  • What forms of penalty should be available?

A pecuniary penalty may not be the most appropriate form of penalty for public sector contraventions. In particular, a declaratory order will often be appropriate, without further penalty, given the consequences of an adverse finding of liability, such as public censure. Whether or not a pecuniary penalty should be able to be imposed must be considered on a case-by-case basis.

A range of further penalty options is available for the Crown and State sector bodies, including adverse publicity orders; external investigation and report; enforceable undertakings; and injunctive orders such as compliance orders, improvement or training orders, or stop notices.

Where a pecuniary penalty is to apply, policymakers should consider whether the maximum penalty should differ for Crown and State sector defendants. The “percentage of turnover” maximum penalty formulation is not appropriate for non-trading public defendants.

588Cabinet Office Circular “Acts binding the Crown: Procedures for Cabinet Decision”, above n 546. The Circular requires an assessment of relevant factors before imposing criminal liability on the Crown and that Cabinet papers address matters such as: who is the Crown for the purposes of the prosecution; who should defend and prosecute the Crown; what procedures should apply; and what penalties should be imposed upon conviction and whether these need to differ from generally applicable penalties.