Part IV: Civil penalties, fines and subpoenas in criminal proceedings
This Part of the paper focuses on enforcing judgments given in civil pecuniary penalty proceedings and enforcing certain criminal fines. It also puts forward a proposal for taking evidence in criminal proceedings. The Working Group does not propose to deal with trans-Tasman service of criminal proceedings. This is significantly different from service of civil proceedings. For one thing, neither country asserts jurisdiction to serve criminal proceedings on defendants out of its jurisdiction. Instead, where a defendant is overseas, extradition is available to secure his or her return if the offence is a serious one.
Another important difference is the process that follows non-appearance by the defendant. In civil proceedings, non-appearance can result in judgment being entered by default. In criminal proceedings, a defendant is made to appear if he or she does not do so voluntarily. While there are rules under SEPA enabling this to occur, the Working Group believes that, in the trans-Tasman context, this is best considered in a future project looking at improved trans-Tasman co-operation in criminal matters.
The Working Group also does not propose to deal with the enforcement of certain regulatory orders (such as community service and probation orders) that can be made in Australia under particular statutes. The nature of these orders makes them inappropriate for enforcement on a cross-border basis.
A civil pecuniary penalty order made in one country should be enforceable in the other as a civil judgment under the proposed trans-Tasman regime. Either country could exclude particular pecuniary penalty regimes in the other country from enforcement.
8.1 Both Australia and New Zealand allow courts to impose civil pecuniary penalties for breach of certain regulatory requirements. Examples include breaches of the restrictive trade practices provisions of the Commerce Act 1986 (NZ) and the Trade Practices Act 1974 (Cth). Significant civil penalties can often be imposed. Civil penalty regimes are more common in Australia, but are being used increasingly in New Zealand.
8.2 Proceedings seeking civil penalties are civil proceedings and subject to the civil evidential burden ('the balance of probabilities'). In Australia, civil penalty proceedings are brought on behalf of the Commonwealth by a Commonwealth public official. In New Zealand, they are brought on behalf of the Crown by the Chief Executive of a Government Department, or by a designated agency such as the Commerce Commission.
8.3 A foreign judgment cannot be registered under the FJA or the REJA if it is for a fine or other penalty. Nor are these judgments enforceable at common law.
8.4 Although the courts do not appear to have considered the matter, it seems
that a civil pecuniary penalty order would be refused registration under the
FJA/REJA on the grounds that it is a penalty.
8.5 A number of important factors are relevant in the trans-Tasman regulatory environment. These include:
- the existence of integrated markets
- common market participants in both countries
- mutual recognition regimes for goods and occupations under the Trans-Tasman Mutual Recognition Arrangement (TTMRA), and
- substantial convergence of regulation in areas such as food standards and product safety standards.
8.6 As between Australia and New Zealand, the risk of regulatory arbitrage and exploitation of enforcement barriers gives both Australia and New Zealand an interest in the integrity of trans-Tasman markets. This mutual interest extends to the effective enforcement of each other's regulatory regimes such as those relating to competition law and security offerings, and preventing those regimes from being undermined by people in the other country. This interest is strengthened by the level of economic integration between the two countries and the signalled move to a single economic market.
8.7 Civil pecuniary penalties play an important role in encouraging compliance with a regulatory regime. If a civil penalty cannot be enforced because the defendant and the defendant's assets are in the other country, the effectiveness of that regulatory regime is reduced.
8.8 For example, suppose the chief executives of two New Zealand companies
enter into a price-fixing arrangement in NZ in relation to their Australian
customers. This arrangement breaches the Trade Practices Act 1974
(Cth). The Australian Competition and Consumer Commission (ACCC) serves civil
pecuniary penalty proceedings on each chief executive in New Zealand. The chief
executives are represented in the proceedings. However the civil pecuniary
penalty orders that result are not enforceable against the chief executives in
New Zealand where they reside and have their
8.9 The trans-Tasman regime outlined in Part II could apply to civil pecuniary penalty orders so that a civil pecuniary penalty order would be enforceable in the same way, and subject to the same requirements, as any other civil judgment.
8.10 There are 2 ways this option could be put in place.
8.11 It could apply to any civil pecuniary penalty order from Australia or New Zealand. This would be consistent with the treatment of tax judgments - a tax judgment of any kind from one country is enforceable in the other. Broad coverage would also avoid anomalies created by including some regimes but not others. It would remove the incentive to skip to the other country to get beyond the reach of a regulatory regime. There would also be no need to keep a list of the regimes covered.
8.12 On the other hand, a mutual interest will not exist for every regulatory regime that imposes a civil penalty, so the underlying rationale for enforcement would not apply.
8.13 The option could be limited to civil penalties in certain statutes, or certain provisions in those statutes. The list could be added to from time to time.
8.14 This approach is consistent with the proposal below for criminal fines (civil pecuniary penalties are often seen as closely related to criminal penalties). It would allow an incremental approach and for the scheme to focus on those regulatory regimes where there was sufficient mutual interest to justify inclusion.
8.15 On the other hand, this approach is inconsistent with the treatment of tax judgments and gives rise to the possibility of anomalies. Maintaining an up-to-date list of statutes or provisions covered could also be difficult.
8.16 The Working Group recognises that allowing civil pecuniary penalties imposed in one country to be enforced in the other is likely to raise concerns. Some may see it as infringing sovereignty to allow laws with a punitive element from one country to be enforced in another. However, the mutual interest in enforcing these regimes seems to outweigh that of maintaining barriers to enforcement on sovereignty grounds. The Working Group is persuaded that broad coverage of civil penalties orders is warranted.
8.17 If the broad approach is taken, the Working Group considers that each
country should be able to exclude a particular pecuniary penalty scheme from
being enforceable by specifying it in regulations. A 'negative' list of this
sort would allow schemes to be excluded on public policy grounds, or because of
the particular domestic focus of the regulatory regime. The public policy
exception to enforcement (see Issue 1) would also be an additional important
8.18 The Working Group supports making civil pecuniary penalty orders from one country enforceable in the other under the proposed trans-Tasman regime. To address concerns about public policy issues, particular pecuniary penalty regimes could be excluded from the scheme by regulation.
Q32. Do you agree that any civil pecuniary penalty order imposed in one country should be enforceable in the other? Do you agree that there should be the option of excluding particular pecuniary penalty regimes from the regime by regulation?
Q33. If you think enforcement should be limited to certain civil pecuniary penalty orders only, please explain your reasons and indicate which penalty orders you think should be included.
Q34. Are there any safeguards or limits on enforcement, other than public policy grounds, that you think are needed?
Fines imposed in one country for criminal offences under certain regulatory statutes should be enforceable in the other, in the same way as civil judgment debts. The regulatory statutes would include:
Trade Practices Act 1974 (Cth)
Commerce Act 1986
9.1 The FJA and REJA both define judgment as one 'given or made by a court in any civil proceedings, or ……in any criminal proceedings for the payment of a sum of money in respect of compensation or damages to an injured party'. Orders to pay a criminal fine fall outside this definition. This is reinforced by the fact the FJA and REJA only apply to judgments for a sum of money that is not a fine or other penalty. This is also a ground for not enforcing a judgment at common law.
9.2 The matters discussed under Issue 8 (eg integrated markets, mutual recognition of activities and interest in the integrity of markets and regulatory regimes) are equally relevant to criminal fines imposed under those regulatory regimes. Criminal sanctions are intended as a deterrent and to ensure compliance with the law. Where offences arise in regulatory statutes, such as the fundraising provisions in the Corporations Act 2001 (Cth) or the Securities Act 1978 (NZ), there is potential for unscrupulous persons to take advantage of the fact that fines cannot be enforced, for example, by skipping to the other country.
9.3 By way of illustration, S Ltd, an Australian-based company, offers an
investment scheme to New Zealanders. There is a misleading statement in its
offer documents. S Ltd is registered as an overseas company in New Zealand and,
as required, has appointed an agent to accept service in New Zealand. A criminal
prosecution is taken under the Securities Act 1978 and a fine is
imposed. It is not possible to recover the fine in New Zealand because S Ltd has
moved any remaining assets out of New Zealand, back to
9.4 The Working Group does not propose that all criminal fines should be enforceable in the other country. The reason for enforcement is the mutual interest in the integrity and effectiveness of certain of each other's regulatory regimes. The guiding principle for enforcement on a trans-Tasman basis is that the fine arises from a regulatory regime impacting on the effectiveness, integrity and efficiency of trans-Tasman markets, or confidence in those markets. Using this yard-stick, areas such as securities offerings to the public, competition law, consumer protection and product safety provisions, occupational regulation, insider trading and prudential regulation are clear candidates. There may also be others. As a start, the Working Group has identified the following list of statutes:
Trade Practices Act 1974 (Cth)
Corporations Act 2001 (Cth)
Consumer protection and product safety legislation at State and Territory level
Occupational regulation legislation at State and Territory level
Commerce Act 1986
Companies Act 1993
Fair Trading Act 1986
Securities Act 1978
Securities Markets Act 1988
Takeovers Act 1993
Financial Reporting Act 1993
Credit Contracts and Consumer Finance Act 2003
Occupational regulation legislation
9.5 The list could be added to over time. Offences covered would include those where a fine and/or imprisonment could be imposed. However, the regime would only be available where a fine had been imposed. 
9.6 The Working Group has noted, however, that some of the Acts listed above also regulate industry issues that only arise in the relevant country. For example, the Commerce Act 1986 (NZ) includes a Part which provides for regulation of electricity line companies, and the Trade Practices Act 1974 (Cth) contains provisions dealing with the introduction of GST and the regulation of the Australian telecommunications industry.
9.7 Given their domestic focus, these industry specific parts would not appear to have sufficient trans-Tasman implications to warrant inclusion. It seems highly unlikely that sanctions imposed on a New Zealand electricity lines company by a New Zealand court, or on an Australian telecommunications company by an Australian court, would need to be enforced in the other country. As a consequence, the Working Group is interested in whether the proposal should exclude the domestic industry specific parts of the legislation set out above.
9.8 The Working Group acknowledges there may be merit in considering whether criminal fines generally should be enforceable across the Tasman. However, this is best considered in the context of future work on increased co-operation in the criminal justice area.
9.9 The Working Group has considered two options to deal with the problem of enforcing fines imposed by regulatory statutes:
Enforcement as a criminal fine
9.10 A criminal fine from one country could be recovered by the other as if the fine had been imposed in that country. This means the coercive powers available to enforce criminal fines in each country would be available to enforce fines from the other.
9.11 This raises two issues. The first is the appropriateness of using the coercive enforcement powers of one country to enforce the criminal sanctions of the other. This may be seen as infringing the sovereignty of the country undertaking enforcement. The second issue is that it would be problematic to treat these fines as local fines without additional requirements. Additional safeguards would be needed to protect defendants, and each country would need the power to refuse enforcement in appropriate cases. From a practical point of view, new operational systems might also be needed to track trans-Tasman fines through the enforcement system.
Enforcement as if a civil judgment debt
9.12 A fine from one country could be enforced in the other in the same way as a civil judgment debt. There is precedent for this approach in Part 5 of the Securities Act 1978 (NZ), which enables a judgment from a designated country requiring the payment of a pecuniary penalty (whether criminal or civil) to be registered. It is then enforced in the same way as a civil judgment debt.
9.13 This option is somewhat unconventional. However, there are clear advantages. First, the country where the fine is to be enforced does not have to use its coercive criminal fine collection powers to collect the other's fines. Secondly, the country whose fine is to be enforced can decide whether this is justified in terms of cost and deterrence, since it will begin enforcement proceedings and bear their cost (recoverable on enforcement).
9.14 Rather than creating a separate regime for criminal fines, it makes sense to include the relevant fines as judgments enforceable under the proposed trans-Tasman regime. The public policy exception to enforcement would apply and the defendant could seek a stay of enforcement to challenge the fine in the original court. Because of the sensitivity of enforcing criminal fines, the Working Group proposes that they could only be registered for enforcement with a higher court.
9.15 The Working Group is conscious that this proposal is likely to raise concerns, even if the mechanisms for enforcing a civil judgment debt are used. In particular, there will be concern about infringing sovereignty. However, selecting criminal offences in regimes where there is a strong mutual interest in effectiveness and integrity in our view justifies removing this traditional barrier to enforcement.
9.16 There may also be some nervousness that this proposal may result in
activity in one country being regulated by the other. The way to address this is
to ensure a real connection between the country imposing the criminal fine and
the conduct amounting to the offence. This could be done by specifying the
statutes to which enforcement applies. The circumstances in which fines would be
enforced in the other country could also be
9.17 The Working Group's preferred option is to allow fines imposed under certain statutes (or certain offences in those statutes) to be enforced under the proposed trans-Tasman regime in the same way as civil judgment debts, with additional safeguards. Although this extends traditional concepts, it seems the simplest and least problematic solution.
Q35. Do you agree that criminal fines imposed for certain regulatory offences should be enforceable in the other country as if they were a civil judgment debt? If not, please explain your reasons.
Q36. What safeguards or limits to enforcement do you think are needed?
Q37. Do you agree with the suggested list of statutes? Are there any you think should be left out? Are there any additional statutes that should be included?
Q38. Should the domestic industry-specific parts of listed statutes be excluded?
Subpoenas in criminal proceedings should be served across the Tasman with the leave of a judge under the Evidence and Procedure (New Zealand) Act 1994 (Cth) and the Evidence Amendment Act 1994 (NZ).
10.1 Currently subpoenas cannot be issued under the trans-Tasman evidence regime  in criminal proceedings. Although evidence can be taken by video link or telephone in criminal proceedings, in practice, this only works if the witness co-operates. However, if a subpoena could be served in the other country, it could require the witness to attend at a court or elsewhere in the other country to give evidence by video link or telephone.
10.2 Not being able to subpoena a witness in criminal proceedings means that, if the witness is unwilling, evidence can only be obtained under less convenient procedures such as the Mutual Assistance in Criminal Matters scheme in each country. A mutual assistance evidence request is actioned at the discretion of the Attorney-General. A local judge takes the evidence and provides a written record to the court making the request.
10.3 If trans-Tasman subpoenas could be issued in criminal proceedings, witnesses could be made to give evidence by telephone or video link, or in person before the court. This would be a relatively simple procedure. It would let the court actually hear and see the testimony, and help it to assess credibility. The Attorney-General need not be involved.
10.4 The protections applying to the service of trans-Tasman subpoenas would provide a level of assurance if criminal proceedings were covered.  These include the need for leave from a judge, who must take into account matters such as the significance of the evidence and whether it could be obtained another way without significantly more cost and with less inconvenience to the witness. Witnesses can also apply to set aside subpoenas served on them if complying would cause hardship and inconvenience.
10.5 The Working Group believes that extending the trans-Tasman evidence
regime to criminal proceedings would be beneficial as the process is simple and
relatively convenient. The protections in the scheme offer sufficient safeguards
against misuse. The Working Group therefore proposes extending the trans-Tasman
subpoenas regime to criminal
Q39. Do you agree that the exclusion of criminal proceedings from the trans-Tasman evidence regime should be removed? If not, please explain your views.
11.1 The Working Group's Terms of Reference raise the question of co-operation between regulators. There is already a high level of co-operation between Australian and New Zealand securities regulators. The Australian Productivity Commission released a Research Report in December 2004 (Australian and New Zealand Competition and Consumer Protection Regimes) looking at the possibility of greater co-operation, coordination and integration of competition and consumer protection regimes in the two countries.  Work is currently being undertaken on increasing co-operation between competition regulators. In these circumstances, there is no significant benefit in considering the matter further in this paper. However, the Working Group would welcome your comment on whether there are other regulatory areas where further trans-Tasman co-operation would be desirable and what form it might take.
46 Note that for offences where the penalty is imprisonment of a certain level, steps can be taken to extradite the alleged offender under the Extradition Act 1988 (Cth) and the Extradition Act 1999 (NZ). It is not proposed to consider sentences of imprisonment, in the context of this project.