Part 3: The core procedural rules

21Part 3 covers the appropriate procedural protections for pecuniary penalties. They are fundamentally based on our assessment of the nature and role of pecuniary penalties and on the principles of fairness, effective and efficient regulation, and certainty. Our proposals in this area should be considered the default approach. However, we agree that in some specific circumstances modifying or relaxing that approach may be justified.

Chapter 6: Application of the New Zealand Bill of Rights Act 1990

22It is not yet clear whether the criminal procedural safeguards in sections 25 and 26 of the New Zealand Bill of Rights Act, which apply to “offences”, also apply to pecuniary penalties. It is clear, though, that the right to natural justice in section 27(1) of the Act applies. In any event, as a matter of good legislative practice, pecuniary penalties should be designed in a way that minimises the risk of a breach of the rights in the New Zealand Bill of Rights Act.

23The alternative creates a risk for the Crown that a court will declare an aspect of a pecuniary penalty regime to be inconsistent with that Act. Pecuniary penalties will be best protected from challenge under the Act if procedural safeguards are modified or limited no more than is reasonable and demonstrably justifiable, in terms of section 5 of that Act.

24We note that pecuniary penalties should be designed in a way that gives appropriate recognition to their punitive substance as opposed to their “civil” form. We note that European and Canadian courts, when asked to determine whether an order is in substance an “offence”, have taken a substantive and expansive approach to that question.

Chapter 7: Standard of proofTop

25In Chapter 7 we conclude that pecuniary penalties should continue to be imposed on the civil standard of proof, or in other words, on the balance of probabilities. The arguments to apply a criminal standard of proof are outweighed by the arguments against it, including that doing so could undermine the regulatory effectiveness of pecuniary penalties, and could lead policymakers to revert to using criminal offences for conduct that does not deserve the disapprobation of the criminal law. Also, the potential unfairness of the lower standard is moderated by the fact that New Zealand courts apply the civil standard of proof having regard to the consequences of a finding against the defendant. A claim that would have a serious financial or reputational impact on the defendant must be proved by evidence having sufficient probative force.

Chapter 8: Burden of proofTop

26The burden of proof in criminal law is imposed on the prosecution. This serves an important purpose in curbing the intrusive power of government and justifying the use of the State’s coercive powers. We note in Chapter 8 that, because pecuniary penalties are also coercive and punitive, the allocation of the burden of proof in pecuniary penalty proceedings also raises procedural fairness issues. We conclude that pecuniary penalty provisions should impose a burden of proof on defendants only in reasonable and demonstrably justifiable circumstances. Those circumstances are set out in the chapter. We also conclude that, because of their novelty, pecuniary penalty provisions should be very clear about who carries the burden of proof for all elements of the alleged breach.

Chapter 9: The penalty privilegeTop

27Officials can investigate pecuniary penalty breaches in much the same way as they can criminal offences. It follows that the same concerns about coercion and the reliability of evidence obtained in those circumstances can be present. In Chapter 9, we recommend that individuals should have the benefit of a privilege against compelled self-exposure to a pecuniary penalty (a “penalty privilege”) when faced with possible pecuniary penalty proceedings. Such a privilege would be the equivalent of the privilege against self-incrimination in the criminal context.

28The rationales for the privilege against self-incrimination in the criminal sphere apply equally to investigations and proceedings that can give rise to pecuniary penalties. The potential penalty can be very significant, and can result in stigma and reputational harm. Also, there is no evidence that the apparent removal of the penalty privilege by the Evidence Act 2006 was undertaken in the light of consideration of the nature of pecuniary penalties.

29The scope of the penalty privilege should be the same as that of the privilege against self-incrimination. It would be able to be relied upon at the investigatory, pre-trial and trial stage. However, in light of the principles of regulatory efficiency and effectiveness, the proposed penalty privilege should be able to be modified or removed by individual statutes where a case can be made that to do so is necessary and justifiable.

30To give effect to the privilege we recommend that the Evidence Act 2006 should be amended to provide for it, as this approach has the benefit of setting a clear standard for pecuniary penalties that is distinct from any of the regimes in which they are used.

Chapter 10: Double jeopardyTop

31Given their punitive nature, pecuniary penalties raise double jeopardy concerns. The principle against double punishment means that in principle a statutory bar should be in place against double punishment through imposition of a pecuniary penalty and a criminal penalty for the “same conduct”.

32Double jeopardy also protects individuals against the stress and financial burden of being pursued through the courts twice for the purpose of penalising the same conduct. Pecuniary penalty statutes should usually provide that once criminal proceedings have been determined there should be no pecuniary penalty proceedings based on the same conduct, and vice versa.

33We accept that in rare cases, there could be a rational reason for allowing a pecuniary penalty and imprisonment for the same conduct. However, this would only be appropriate where a specific statutory breach could encompass a range of conduct from the truly inadvertent through to intentional conduct with knowledge of substantial harm. For these types of breaches we accept a case may be made that a pecuniary penalty statute may provide for imposition of imprisonment after a pecuniary penalty if subsequent evidence comes to light.

34We also note in Chapter 10 that policymakers should give thought to whether a series of related acts constitutes “the same conduct” and if so how this may be expressed in legislation. Otherwise, issues are likely to arise about the similarity or otherwise of the conduct, acts, transactions in issue, or similar, that are being targeted by the pecuniary penalty provision.

Chapter 11: Intention and strict liabilityTop

35We conclude in Chapter 11 that pecuniary penalties should not be precluded from being used where mens rea is a relevant element of the contravention and there may be an aspect of moral blameworthiness. Precluding this could unduly limit their scope, and since pecuniary penalties have a punitive function they may be used to target morally blameworthy conduct. Mens rea may therefore be a required element.

36We note that, as there are no settled principles to determine the approach to the mental element of a pecuniary penalty provision that is silent as to fault, the provisions should be as clear as possible as to the required mental element.

37The LAC Guidelines that provide guidance about the use of strict liability offences – those with no specific mental element – apply equally to pecuniary penalties. These factors should form the basis for guidance as to the use of strict liability pecuniary penalties. For clarity, strict liability provisions should state that they are imposed on the basis of strict liability and statutes should explicitly identify any applicable defences.