In 2011, the Law Commission was asked to review the use of pecuniary penalties as a regulatory tool. These are financial penalties that policymakers are increasingly opting to use in place of criminal sanctions, to punish and deter misconduct in a number of regulatory regimes. They were first used in 1986 in the Commerce Act and now appear in 18 Acts of Parliament, including the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and the Unsolicited Electronic Messages Act 2007.
The Commission published an Issues Paper in 2012, seeking feedback on a number of questions relating to the use and design of these penalties. It received 20 submissions from a range of different stakeholders.
The Commission has published its Report in 2014 with final recommendations to the Government on the use and design of pecuniary penalties. In its Report, the Commission makes nine recommendations to Government about the need for these penalties to be carefully designed so that they do not create a risk of unfairness or injustice to defendants.
The Report was tabled in the House of Representatives on 30 October 2014. The Government responded to the Report on 4 May 2015, largely accepting the recommendations in principle but also said that more work was required to analyse the Commission’s proposed legislative guidelines.
The Government asked the Law Commission to review the law on civil penalties.*
Civil penalties have been a feature of regulatory legislation in New Zealand since the mid-1980s. In recent years they have been included in an increasing number of Acts as part of a suite of enforcement measures. During that time the Legislation Advisory Committee has raised concerns (a) about the nature of civil penalties and (b) that insufficient consideration has been given to the principles that should guide both the introduction of civil penalty provisions and the procedure for their imposition.
The Law Commission considered the law relating to civil penalties, with emphasis on:
- the nature of civil penalties;
- when it might be appropriate to include civil penalties in a legislative regime;
- the procedural provisions that should accompany them; and
- whether some form of guidance about civil penalty provisions should be in place.
*Over the course of the review, the term has been changed to "pecuniary penalties".