Contents

Chapter 7
Standard of proof

Alternative options

7.18Two other options for the standard of proof were addressed in submissions. First, the Institute of Directors suggested that the criminal standard should be required for intentional breaches and for the “gravest” pecuniary penalties.

7.19It would be possible for statutes to provide for this. However, we do not favour this option. In our view, it flows from the discussion above that the nature of the penalty is relevant to which standard of proof should apply. Whether or not a pecuniary penalty provision involves an element of intention, or whether it can be described as “grave”, no conviction or risk of imprisonment results. On balance, we consider that appropriate protection from any difference in the quantum of a pecuniary penalty, or the stigma that results from such a breach, can be afforded to the defendant by the courts’ approach to the civil standard.

7.20Furthermore, in our view, whether intentional and knowing conduct should be dealt with on the criminal standard is better addressed by an open debate on whether the proposed “intentional” or “grave” breach of the law ought instead to be a criminal offence.

7.21Finally, a proposal to use the criminal standard for the gravest pecuniary penalties raises the question of what is “grave”. A line could be drawn based on the size of the maximum penalty, or the type of conduct that is covered. However, this would require drawing arbitrary lines that may not reflect commercial realities. For instance, a one-person company may regard a maximum penalty of $50,000 to be grave, whereas the same may be regarded as trivial by a large multi-national. For these reasons, the proposal is not favoured.

7.22Bell Gully favoured the option of exploring statutory provision for an intermediate standard of proof, as exists in some circumstances in the United States. Such a standard, they suggested, could more properly reflect the function and severity of pecuniary penalties without making it unduly difficult for the regulator to obtain an order in appropriate cases.

7.23United States law recognises a third standard of proof, which falls between the criminal and civil standards. The standard has variously been described as requiring evidence that is “clear and convincing”, “clear, convincing and satisfactory” or “clear, cogent and convincing”.129 It is generally applied in high-stakes proceedings involving deprivations of individual rights not rising to the level of criminal prosecution (for example, cases involving termination of parental rights or deportation), and in cases where stronger evidence is required because there is thought to be “special danger of deception” (for example, suits to establish the terms of a lost will, and suits for the specific performance of an oral contract).130 It has not been applied in proceedings for the United States equivalent of pecuniary penalties.

7.24A new statutory formulation of the standard of proof will demand fresh interpretation by the courts and a period of uncertainty, which increases litigation risk. This risk needs to be weighed against the benefits that a new formulation could provide. Given that our courts are well versed in applying the civil standard of proof in the manner described above, it is not clear what a new formulation could add. In the absence of evidence that the existing standard of proof is creating difficulties for the courts, we do not favour this proposal.

GUIDELINE

G4 Pecuniary penalties should be imposed on the civil standard of proof

Pecuniary penalties should continue to be imposed on the civil standard of proof, or in other words, on the balance of probabilities, rather than the criminal standard of proof.

129Woodby v INS 385 US 376 (1966); Addington v Texas 441 US 418 (1979); and Santosky v Kramer 455 US 745 (1982).
130JW Strong (ed) McCormick on Evidence (4th ed, West Publishing, St Paul (MN), 1992) at § 340.