Chapter 19
Crown and State sector defendants


19.1An additional issue we have considered in the course of preparing this Report is the need for guidance about whether and how a pecuniary penalty statute should apply to the Crown and State sector defendants. The State sector is made up of a diverse range of public entities.533 The nature of these entities, and of the Crown itself, gives rise to special considerations that may need to be factored into the design of a pecuniary penalty regime where these entities engage in conduct or behaviour that falls within the scope of the regime.
19.2The issue is pertinent to both existing and future pecuniary penalty regimes. All the current pecuniary penalty statutes purport to bind the Crown. They potentially extend, therefore, to the Crown and public entities where they participate in the activity that is regulated by the statute.534 However, variation in the specificity of legislative drafting gives rise to a degree of uncertainty as to whether the Crown would in fact be liable for a pecuniary penalty under current provisions. If public entities are liable, the penalty to which they would potentially be exposed is of course substantial. We have recommended that, as each existing pecuniary penalty statute is periodically reviewed or amended, the opportunity should be taken to assess the statute against the guidance in this Report.535 That would also be an opportunity to assess whether there is sufficient certainty and clarity about the liability of the Crown or State sector defendants, and whether any statutory clarifications may be desirable.
19.3If pecuniary penalties are applied in future to new forms of regulated conduct, the extent to which those regimes would impact on the Crown and other public bodies will need to be considered. Our view is that it would be desirable to improve the level of guidance for policymakers, in light of contemporary government, whose activities:536

… reach into almost all aspects of commercial, industrial and developmental endeavour and where it is commonplace for governmental commercial, industrial and developmental instrumentalities … to compete and have commercial dealings on the same basis as private enterprise

19.4In approaching these issues, it is important to be clear about whether and when we are talking about “the Crown”, and public entities outside the core Crown. It is also necessary to consider the forms of penalty available to policymakers, and which will be the most effective and appropriate for Crown and State sector defendants.

19.5In this chapter we discuss the following considerations that policymakers should take into account in the design of pecuniary penalty regimes:

(a) identifying whether the Crown and any parts of the State sector should be included or excluded;
(b) legislative drafting and presumptions – making it “abundantly clear” whether the Crown is to be subject to liability;
(c) considering what form of penalty should apply – either a pecuniary penalty or a different form of penalty;
(d) considering alternatives to pecuniary penalties – such as the declaratory order, adverse publicity orders, external investigation or inquiry, enforceable undertakings, injunctive orders, compensation orders and costs orders;
(e) potential issues with imposing pecuniary penalties on the Crown and State sector:
(f) procedural issues – invoking relevant procedural provisions of the Crown Proceedings Act 1950 and the Crown Organisations (Criminal Liability) Act 2002, and factoring in statutory immunities.
533Public entities include both statutory and non-statutory entities, and incorporated companies such as State-owned enterprises and Crown entity subsidiaries. See State Services Commission “A Guide to New Zealand’s central government agencies” (1 September 2011). There are also local authority bodies and council controlled organisations (CCOs) that we do not specifically address, but which may raise their own particular issues.
534See in particular Biosecurity Act 1993; Commerce Act 1986; Hazardous Substances and New Organisms Act 1996; Financial Markets Conduct Act 2013; and Unsolicited Electronic Messages Act 2007.
535Recommendation 6.
536Bropho v State of Western Australia (1990) 171 CLR 1 (HCA) at 19.