Contents

Chapter 8
Burden of proof

Ways of reversing the burden of proof

8.34Below, we give examples of ways that the burden of proof may be placed on a defendant, reiterating our principled position that any proposal to do so must be robustly justified and referring to the points made at [8.28] to [8.30].

Statutory defences

8.35One way in which a burden is imposed on a defendant is through including a matter in a statutory defence, instead of requiring the person bringing the proceedings to prove the matter as part of their case. Here, the defendant bears the burden of raising the matter to bring it into evidence (an evidential burden), or positively establishing that the defence is made out (a legal burden). There may be times where it is appropriate for the defendant to carry the legal burden for a statutory defence. But that should always be made clear and should be carefully justified in the particular policy context.

8.36In Australia, the Regulatory Powers (Standard Provisions) Bill 2014 (Cth), which is before the House of Representatives at the time of writing, will create a general rule that wherever the defendant wishes to rely on a statutory defence created by a penalty provision, the defendant bears only the evidential burden; that is, the burden to raise the defence.149 The enforcement agency would then have to show the defence did not apply. We do not go so far as recommending a general rule to this effect. However, we do recommend that every statutory defence makes it clear whether it places a legal or an evidential burden on the defendant.150 This will determine whether the defendant merely has to raise evidence that puts the defence in issue, or whether he or she must convince the court that the defence is made out. Section 9 of the Unsolicited Electronic Messages Act provides a good example of a provision that clearly specifies that the legal burden of establishing the statutory defence is on the defendant.

Statutory presumptionsTop

8.37Another way of placing the burden of proving a particular matter on a defendant is by way of statutory presumption.151 In this context, a statutory presumption means that if the enforcement agency proves fact A, then fact B arises by way of presumption, which can only be rebutted by the defendant convincing the court of the alternative. There are a small number of examples of such statutory presumptions in existing pecuniary penalty regimes.152 There are a number of reasons why such presumptions may be used within a penalty regime, including to overcome evidential difficulties that would otherwise make it impossible to assign liability to certain parties.153
8.38Wherever they are used, statutory presumptions should make it clear whether they can be rebutted merely by raising evidence to the contrary (an evidential burden of proof), or whether the defendant bears the burden of convincing the court of the alternative (a legal burden of proof).154 Not all existing penalty provisions do this. Again, section 9 of the Unsolicited Electronic Messages Act provides a useful example of a provision that makes such matters clear. Under section 9(2), evidence that the recipient of the message used the unsubscribe facility creates a presumption that he or she withdrew consent. The legal burden of rebutting that presumption, and establishing that there was in fact consent to receive the message, is on the defendant, as is made clear by section 9(3).
8.39Statutory presumptions (and deemed liability provisions, discussed below) may be desired to achieve regulatory objectives efficiently. However, as noted in the Australian Law Reform Commission’s report on civil penalties:155

… legislators must always balance efficacy arguments for reversing the onus of proof against fairness issues such as the harshness of the penalty and the impact on the segment of the regulated community that is likely to be subject to the deeming provision.

8.40We note that Australian guidelines recommend that the use of presumptions should be kept to a minimum.156

Deemed liability provisionsTop

8.41Deemed liability provisions also have the effect of imposing a burden of proof on defendants. Deemed liability means that, if the enforcement agency establishes the liability of person A, the liability of person B is deemed also to have been established. The burden is on person B to exonerate him or herself (or itself) from liability. For instance, a company may be deemed liable where the liability of the directors is made out, or vice versa.157

8.42Again, deemed liability provisions require robust policy justification and a balancing of regulatory efficiency with fairness. This is even more important because deemed liability provisions reverse the burden of proof for the defendant’s entire liability for the penalty, not just one element of the defendant’s liability.

Penalty quantumTop

8.43The final matter for discussion is who has the burden of proving contested facts relevant to penalty quantum. In the criminal sphere, if facts relevant to sentencing are disputed, the Sentencing Act 2002 provides that the prosecutor must prove the existence of disputed aggravating facts and must disprove any disputed mitigating facts raised by the defendant.158 The burden of proving contested facts relevant to sentencing is therefore clearly on the prosecution.

8.44The courts have essentially applied a criminal sentencing framework to pecuniary penalties: the court determines a starting figure and then takes mitigating and aggravating factors into account. But the question of who has the burden of proving or disproving the mitigating or aggravating factors in question does not appear to have been considered.

8.45Arguments about penalty quantum may be particularly likely where courts are trying to determine the extent of financial damage or gain caused by the defendant’s conduct. Both sides may put forward competing expert analysis of complex evidence – for example, the extent to which the defendant’s conduct lessened competition in a market. That is likely to be contested, particularly if large sums are involved.

8.46We suggest that policymakers consider whether to address these matters by imposing the burden of establishing disputed facts on the enforcement agency. That will depend on the particular regulatory regime. Such an approach may not be appropriate for penalty regimes involving large corporate entities and where a policy decision has been made to allow penalty quantum to be set as a percentage of company turnover, expressly to deal with situations where commercial gain cannot be readily ascertained.159

GUIDELINE

G5 The burden of proving all the elements of a contravention that results in a pecuniary penalty should usually be on the enforcement agency bringing proceedings

A pecuniary penalty provision should only place the burden of proving a matter in issue on a defendant where doing so is reasonable and can be demonstrably justified. This might include where:

  • the person bringing proceedings would face serious difficulty in proving the matter, and the defendant has peculiar knowledge of the relevant facts; or
  • it would be extremely difficult or expensive to require the person bringing proceedings to provide proof, and that proof could be provided readily by the defendant; or
  • a policy decision has been made that it is appropriate, in the particular circumstances, for the regulated community to be encouraged to comply with certain standards or take certain precautions, having regard to wider considerations of justice and fairness.

Where it is justifiable to impose a burden of proof on a defendant, this should generally be an evidential rather than legal burden. A legal burden should only be imposed on a defendant if it is clear that the desired regulatory outcome cannot be achieved by imposing only an evidential burden.

Pecuniary penalty provisions should be drafted to minimise any ambiguity as to:

  • who has the burden of proving all matters in issue, including the elements of the breach, defences, and matters relating to penalty quantum; and
  • whether a burden is an evidential or legal one.
149Regulatory Powers (Standard Provisions) Bill 2014 (Cth), cl 96.
150See the Issues Paper, above n 134, at [6.49]–[6.51].
151For discussion of the different uses of the term “statutory presumption” see Charles, Cromwell and Jobson, above n 132, at 130–131;
and R Eggleston Evidence, Proof and Probability (2nd ed, Weidenfeld and Nicolson, London, 1983) at 106–109. See also D Mathieson (ed) 
Cross on Evidence (online looseleaf ed, LexisNexis) at [2.7]; and Bruce Robertson (ed) Adams on Criminal Law (online looseleaf ed, Brookers)
at [ED1.08].
152Commerce Act 1986, ss 42 and 90; and Financial Markets Conduct Act 2013, s 535. Section 42 of the Commerce Act concerns proceedings commenced against a supplier for resale price maintenance. If the following facts are established then it shall be presumed, in the absence of evidence to the contrary, that the supplier acted “on account of” one of the matters in s 37(3)(d) or (e):
  • the supplier has refused to supply requested goods to another person;
  • immediately before doing so the suppler had been supplying those goods to that person or a person carrying on a similar business; and
  • during the six months prior to refusing to supply those goods the supplier became aware of one of the matters referred to in s 37(3)(d)
    or (3).
153​EM Morgan has listed seven reasons for the creation of a statutory presumption, including:
  • to avoid a procedural impasse created by the impossibility of securing legally competent evidence of the presumed fact;
  • to produce a result in accordance with the preponderance of probability;
  • to require the party having peculiar means of access to the facts and evidence of the facts to make them known to the court; and
  • to reach a result deemed socially desirable wherever fact A exists.
EM Morgan “How to Approach the Burden of Proof and Presumptions” (1953) 25 Rocky Mountain LR 34 at 43–44, cited in Charles, Cromwell and Jobson, above n 132, at 135–136.
154When a statute says that a presumption will operate “unless the contrary is proved”, it places a burden of proof on the party who seeks to rebut the presumption: Robertson, above n 151, at [ED1.08].
155Australian Law Reform Commission Principled Regulation: Federal Civil and Administrative Penalties in Australia (ALRC R95, 2003) at [8.61].
156This is because they place a legal burden on the defendant. Where it is intended for a presumption to be created, this should be clear on the face of the legislation: Attorney-General’s Department “A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers” (September 2011) at [5.1].
157See for example s 534 of the Financial Markets Conduct Act 2013, titled “Directors treated as having contravened in case of defective disclosure”. If the court is satisfied that an entity named in s 534(1) has contravened a particular provision, then under s 534(3), every director of the entity “must be treated as also having contravened the provision”. Such directors have a statutory defence to liability under s 501, but they carry the burden of establishing it.
158The mitigating fact must not be wholly implausible or manifestly false, and the burden is on the defendant where the fact does not relate to the nature of the offence or the offender’s part in the offence: Sentencing Act 2002, s 24(2)(c).
159See for example the Commerce Act 1986 and the Court of Appeal’s statements as to determining penalty quantum in such situations in Telecom Corporation of New Zealand Ltd v Commerce Commission [2012] NZCA 344 at [29].