7.6The Commission recommends that pecuniary penalties should continue to be imposed on the civil standard of proof, or in other words, on the balance of probabilities. It does not favour the adoption of the criminal standard of proof. The argument in favour of moving to the criminal standard focuses on the nature of pecuniary penalties as a grave, state-imposed sanction that serves much the same ends as a criminal penalty. The argument continues that courts should not impose a pecuniary penalty without a high degree of confidence that the defendant has committed the breach, and that society has the same interest in ensuring that it does not penalise the innocent as it does with criminal offences. We have some sympathy for this argument but, on balance, we disagree.
… its substantial stigmatizing effect, the possibility of imprisonment, and the fact that it serves not merely to impose costs on the defendant but also to express the condemnation of the community.
7.8A reading of this quote, alongside the discussion in Chapter 4 of this Report, will indicate that the position is finely balanced. As noted in that chapter, it is possible that pecuniary penalties may sometimes have as stigmatising an effect as some criminal convictions, and they also exist not merely to impose costs on the defendant but also to express the condemnation of the community. However, criminal conviction remains the gravest penalty available, and the criminal trial is unique in that it can, in many cases, result in the deprivation of liberty. Because of these consequences the need is heightened to ensure that only the guilty should be found guilty and punished, even at the cost of some wrongful acquittals. The fact that the risk of conviction and incarceration does not arise with pecuniary penalties supports a view that the application of the civil standard of proof is justifiable.
7.9A number of submitters voiced concerns about the practical impact that a shift to the criminal standard for pecuniary penalties would have. There was concern that it would undermine the statutory regimes where pecuniary penalties usually feature by inhibiting regulators from using them in the manner intended: to act as a tool that fills an existing gap between criminal offences and lesser forms of penalty or intervention. If a criminal standard were imposed, it would be difficult to see what role pecuniary penalties would play in the regulatory environment.
7.11Another practical concern is that some regimes align orders for compensation, injunctions and management bans with a finding of liability for a pecuniary penalty. The practical benefits offered by this approach might be lost if pecuniary penalties were to be proved to a higher standard.
… it is not the position that flexibility is “built into” the civil standard, thereby requiring greater satisfaction in some cases. Rather, the quality of the evidence required to meet that fixed standard may differ in cogency, depending on what is at stake.
7.15The majority considered that in disciplinary proceedings this approach gave proper protection to the person subject to the process, who would face penalties and stigma if found guilty of misconduct.
7.16Not all of the arguments relied upon in Z v Dental Complaints Assessment Committee carry the same weight in relation to pecuniary penalties. The statutory purpose of pecuniary penalties differs from disciplinary hearings. The latter, as the majority found, have as their purpose public protection. Pecuniary penalties aim to protect the public too, but their emphasis is more markedly on deterrence by way of substantial penalty. They have more in common with criminal proceedings than disciplinary proceedings in this respect.
7.17However, pecuniary penalties do share some of the features referred to by the Supreme Court. They too target a wide range of technical and more substantial breaches of the law. In the former cases, it would be expected that the penalty would be considerably lower. Importantly, they also carry the benefit for the defendant that they avoid the imposition of a criminal conviction. Therefore, in our view the civil standard of proof is appropriate in principle. New Zealand courts’ approach to its application reinforces this view.