Civil penalties are a ‘middle ground’ between criminal penalties and civil remedies. The purpose of a civil penalty, generally, is to punish or deter a party engaging in a serious breach of the law, as a criminal penalty does. A civil penalty is ordered by a civil court (rather than a criminal court) and, consequently, is subject to the lower standard of proof and less strict evidence rules of civil proceedings. However, as discussed below, the standard of proof required in civil penalty proceedings will increase in proportion to the severity of the penalty sought. Further, civil penalties are debts and, if unpaid, are collected through the civil process, such as seizure and sale actions and bankruptcy proceedings, unlike unpaid criminal fines where imprisonment is a possibility.
Civil penalties do not attract the same consequences as a criminal conviction, such as the social stigma and disqualification from certain professions. Further, the advantage of a civil penalty in the context of consumer protection is that an enforcement agency can seek a civil penalty which has a deterrent effect, and, in the same proceedings, seek consumer redress (where possible) and stop the contravening conduct.
This discussion considers the potential application of two types of civil penalty: pecuniary penalties and banning orders.
Civil penalties expose defendants to more serious consequences than are otherwise available with the existing civil remedies. In response to this, the standard of proof in civil proceedings varies in proportion to the seriousness of the consequences for the defendant. While the plaintiff must always prove their case ‘on the balance of probabilities’, courts have held that they must be more convinced that the defendant has breached the law if a civil penalty is sought than if a civil remedy is sought. While the standard of proof is never the criminal standard of ‘beyond a reasonable doubt’, it is, nevertheless, a flexible, less onerous standard of proof designed to protect, to a certain extent, the rights of the defendant.