MEDIA RELEASE
8 November 2012
Hon Sir Grant Hammond KNZM
President
Law Commission
Release of Law Commission Paper on Civil Pecuniary Penalties
The Law Commission is seeking public feedback on the use of financial penalties by enforcement agencies to punish
corporates and individuals for breaches of the law.
In an Issues Paper published today, the Commission notes bodies like the Commerce Commission are increasingly resorting
to financial, or pecuniary, penalties instead of criminal sanctions to deal with a range of commercial and financial
offending such as insider trading and price fixing.
These penalties can involve very substantial sums – up to $1m for an individual or more than $10m for a company – and
are frequently used by enforcement bodies to punish breaches of a wide range of commercial and finance law including
securities and overseas investment laws and anti-money laundering legislation.
They were first used in legislation in 1986 and they are now a feature of 15 Acts of Parliament.
The Commission notes that one of the attractions of financial penalties for enforcement bodies is that they are easier
to obtain than criminal convictions because they are a civil rather than a criminal matter, requiring a lower standard
of proof and more relaxed rules of evidence and procedure.
They can also have benefits for offenders. There is no chance of imprisonment with a civil pecuniary penalty and less
risk to a person’s travel and work opportunities because of the lack of conviction.
However, the President of the Law Commission and project leader, Sir Grant Hammond, said the risks and benefits of an
increasing reliance on civil penalties in New Zealand statutes needed to be carefully weighed.
For example, under a civil penalties regime, the court does not need to be convinced beyond reasonable doubt before it
penalises a defendant. And the defendant does not benefit from protections like the right to silence and presumption of
innocence. Also, there is a risk that civil pecuniary penalties might allow white-collar, corporate offenders to be
treated more favourably than those accused of more traditional criminal offending.
“It is essential that our enforcement agencies are able to enforce their laws effectively. The question is whether we
have the correct balance between those regulatory needs and fairness for individuals. There needs to be a debate about
when such penalties are desirable, how they should be formulated and what safeguards there should be.”
The Issues Paper describes how civil pecuniary penalties are used in New Zealand. It asks questions about the nature of
these penalties and when it might be appropriate to use them in legislation. It also asks questions about what process
and protections should be used when they are imposed. The Commission seeks views on all of these matters.
The Commission welcomes any comments or submissions on the Issues Paper. The closing date for submissions is Friday 15
February 2013. The Issues Paper is available from the Law Commission’s website at
www.lawcom.govt.nz/project/law-relating-civil-penalties/issues-paper.
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