Chapter 5
Role of pecuniary penalties

Practical considerations

5.42Some practical considerations need to be addressed when a determination is being made as to what type or types of penalty should be included in a regime. Most notably, any proposal for a pecuniary penalties regime will need to identify an adequately resourced enforcement body or agent, which should make its decisions as to investigations and proceedings independently. At present, most statutes provide for pecuniary penalties to be sought by independent statutory bodies, such as the Commerce Commission, Financial Markets Authority and Takeovers Panel. Under other statutes, the role of commencing proceedings is given to the chief executive of a department or ministry,89 or in the case of the Unsolicited Electronic Messages Act 2007, to the Department of Internal Affairs.90
5.43One pecuniary penalty statute – the Telecommunications (Interception Capability and Security) Act 2013 – provides for the Police to investigate conduct that might lead to a pecuniary penalty, and to commence the proceedings.91 That Act also provides for the New Zealand Security Intelligence Service, Government Communications Security Bureau and “a specified law enforcement agency within the meaning of section 50 of the Search and Surveillance Act 2012 that is approved by an Order in Council under that section to use interception devices”,92 to be enforcement agencies for the purpose of pecuniary penalty proceedings.93 It may be argued that this approach makes sense in the context of that Act as the breach involved (serious non-compliance with duties under the Act94 or contravention of a compliance order) may come to the attention of the Police during the conduct of its normal practices. However, outside of those circumstances, it would be very unusual for the Police to be given this role. It follows that pecuniary penalties will not be appropriate where a suitable enforcement agency cannot be identified.

5.44A further practical consideration is the operational limitation of pecuniary penalties being enforced as civil debts. This means that the tools available for the enforcement of criminal fines – including the seizure of property and making compulsory deductions from income or a bank account – are not available. Pecuniary penalties are likely to be ineffective, then, against people who cannot afford to pay.

5.45In contrast, there should be caution against a view that cost savings can be made by the use of pecuniary penalties, without clear evidence. It might be thought that pecuniary penalties present an option for reducing the burden on the criminal justice system. However, the alternative view is that the growth in pecuniary penalties will increase the burden on the court system as a whole. This may be particularly the case where it is anticipated that regulators are more likely to take pecuniary penalty proceedings than criminal ones. Furthermore, where pecuniary penalties are introduced instead of criminal offences, the exercise will have the effect of merely shifting costs from the criminal to the civil justice system. Therefore it is unclear whether and to what extent cost savings will occur, particularly since, at present, most pecuniary penalties are High Court matters.95
89The Chief Executive of the Ministry for Primary Industries is responsible for commencing pecuniary penalty proceedings under the Biosecurity Act 1993 and the Hazardous Substances and New Organisms Act 1996. The Chief Executive of Land Information New Zealand is responsible for commencing pecuniary penalty proceedings under the Overseas Investment Act 2005 (delegated to the Overseas Investment Office: see ss 30 and 48(1)).
90Sections 4 and 45(1). The Department of Internal Affairs and Reserve Bank of New Zealand are also among the enforcement bodies under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
91Telecommunications (Interception Capability and Security) Act 2013, ss 5, 97 and 3, definitions of “law enforcement agency” and “surveillance agency”.
92Currently this is the Department of Internal Affairs or the New Zealand Customs Service.
93See Telecommunications (Interception Capability and Security) Act 2013, s 3, definitions of “intelligence and security agency”, “law enforcement agency”, and “surveillance agency”.
94All network operators must ensure that their public telecommunications networks and telecommunications services have full interception capability.
95In ch 13, we propose that pecuniary penalties that fall within the District Court’s civil jurisdiction should be heard there, provided that there is not some other matter that warrants High Court attention, such as where the statute deals with complex commercial matters.