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Pecuniary penalties a legitimate tool says Law Commission

The Law Commission has released a report Pecuniary Penalties: Guidance for Legislative Design which concludes that pecuniary penalties are a legitimate regulatory tool when used appropriately.

Pecuniary penalties are imposed by the High Court under the authority of a statute for a breach of that legislation. The primary purpose of such a regime is to secure compliance with the statutory requirement and to penalise non-compliance.

Law Commission President Sir Grant Hammond says the High Court decision to impose a pecuniary penalty is discretionary.

"It can involve very large sums of money. This is done without a criminal trial or a conviction being entered. As a technique pecuniary penalties have drawn increasing attention from ministries of the State. It is attractive because it avoids the protracted and expensive litigation associated with a criminal trial, and it is a more flexible regulatory tool." 

However, pecuniary penalties need to be carefully designed so that they do not create a risk of unfairness or unjustice, the Commission says. It makes nine recommendations to the Government in that regard.

The Commission recommends that the Ministry of Justice be consulted on all proposals for pecuniary penalties at the policy development state, and that the Parliamentary Counsel Office draft model provisions.

The report sets out 21 guidance points for policymakers that cover best practice when designing pecuniary penalties.

Justice Minister Amy Adams has welcomed the report. She says the Government will consider the recommendations made by the Commission and will formally respond by April 2015. 

Last updated on the 30th October 2014