Part 2: The nature and role of pecuniary penalties
Chapter 4: Nature of pecuniary penalties
16In Chapter 4, we make the point that pecuniary penalties should be designed according to an accurate and principled conceptualisation of their nature. That conceptualisation needs to be independent of the existing regimes where they are found. This is especially important as their use across the statute book expands, which we predict it is likely to do.
17Chapter 4 identifies the following as being fundamental features of pecuniary penalties:
- They are investigated, sought and imposed by the State for breaches of statutory prohibitions.
- They aim to deter breaches by the threat of punishment.
- They can result in the imposition of a severe penalty.
18Although they do not result in a criminal conviction, pecuniary penalties are a grave form of state-imposed punishment. Their design needs to give appropriate recognition to the potential imbalance between the parties concerned. Moreover, procedural protections should not be designed with the best-armed and most capable defendant in mind. Rather, they should protect the potentially vulnerable. However, we also note that this does not mean that the relaxation of procedural protections would never be warranted, depending on the particular needs of some regimes.
Chapter 5: Role of pecuniary penaltiesTop
19Policymakers who are deciding whether or not to include pecuniary penalties in a statute should consider pecuniary penalties alongside all the other main forms of penalty that could be included in the regime. What is required is a robust and transparent analysis of the circumstances when each form of penalty would be appropriate. When weighing the appropriateness of different forms of penalty policymakers should consider the following:
- The effectiveness and efficiency of the proposed penalty. Any policy decision about the inclusion of one or more forms of penalty in a regime should take into account whether the penalty will be effective and efficient in achieving the desired outcomes of the regime. Pecuniary penalties may be effective and efficient where:
- a regime is designed around theories of responsive regulation, where a regulator needs a range of tools to enable it to effectively obtain compliance;
- a regime targets corporate contraventions for financial gain, although any policy proposal for them must properly assess the nature of the actors and conduct at hand;
- it is intended that an enforcement body should be able to seek both to obtain compensatory orders and punish breach in a single set of proceedings.
- Practical considerations. Policymakers should consider whether any practical considerations have a bearing on which form of penalty to adopt. For example, with pecuniary penalties there is a need for an enforcement body that is capable of bringing proceedings.
- The harm caused or the nature of the conduct. One of the key questions facing policymakers is whether the form of penalty is appropriate given the harm caused and the nature of the conduct. This question needs to be openly addressed.
20Merely stating that a legislative regime is “regulatory” in nature is an inadequate justification for using pecuniary penalties to enforce it.