Corporate Crime – Understanding the playing field

Civil proceedings 

In Australia, we have adopted the “adversarial system” for our civil proceedings. The underlying precept of this system is that the “truth” can be arrived at by parties to the litigation challenging and testing each other’s case before the court. Other civil jurisdictions have adopted an “inquisitorial system” whereby the court searches for the “truth” through conducting investigations and exercising inquisitorial powers.

A principal feature of the adversarial system is that both the party bringing the claim and the party defending the claim must “reveal their case” as part of the process. This starts with the preparation of documents recording the key material facts relied on by the parties, which serves to define the ambit and nature of the dispute. The process thereafter is focused on the gathering and exchange by the parties of evidence relevant to the dispute.

Unlike in criminal prosecutions, if a defendant to a civil proceeding disagrees with the claim, it must file a defence which reveals the basis of its disagreement. This requirement is in stark contrast to the “right to silence” which is afforded to defendants in criminal and can arise in civil penalty matters.

Civil penalty proceedings

Civil penalty proceedings have aspects that resemble both civil proceedings and criminal prosecutions. Similar to criminal prosecutions, civil penalty proceedings are commenced by the State or Commonwealth (usually a Government agency or regulator) alleging that the respondent has contravened the law.

Civil penalty provisions are a common feature of both State and Federal legislation in Australia. Civil penalties are an important enforcement tool for a range of regulatory agencies including ASIC and the ACCC, used to deter both a particular person or corporation, and others more generally, from contravening the law. 

Similar to civil proceedings, civil penalty proceedings are an adversarial contest in which the “issues and scope of possible relief are largely framed and limited as the parties may choose”[1]. However, an individual who is defending civil penalty proceeding may be entitled to claim privilege against self exposure to penalty and resist answering questions or conceal their case until all of the evidence against them has been disclosed.

Civil penalty proceedings do not typically require proof of intent, which is a common feature of most criminal prosecutions.

Criminal prosecutions 

There are two key features of criminal prosecutions that permeate how prosecutions are conducted in Australia.

The first feature is that in criminal prosecutions the prosecutor must prove the commission of a crime “beyond a reasonable doubt”. This means that the court has to be convinced that there is no reasonable doubt that something is true (or not true, as the case might be). In practice, this is a very high standard of proof that a prosecutor must meet. It is also why it is a very common tactic for defendants to lead no evidence in response to a criminal prosecution. It is also why the admissibility of evidence becomes critical in the criminal jurisdiction. Criminal cases are often won and lost on the basis of what is admitted into evidence.

The second key feature of criminal prosecutions is that they are an “accusatorial” process. The state has the burden of proving its case and a defendant is not required to volunteer evidence or reveal its hand. As a result, in a criminal prosecution, the relevant evidence is typically obtained through investigations conducted by law enforcement agencies or regulators, such as ASIC and the ACCC. The evidence is often gathered through the exercise of coercive powers by those regulators and agencies. As a general proposition, evidence obtained illegally as a result of the exercise of coercive powers cannot be used in a prosecution.

Relevant to the exercise of coercive powers and the prosecution process more generally is the privilege against self-incrimination. The privilege is a “basic and substantive common law right”[2] and an aspect of what is commonly referred to as the right to silence. In essence, the privilege against self-incrimination provides that a person cannot be required to answer any question or provide any document if the answer or document would tend to incriminate that person.[3] The privilege is considered necessary to preserve the presumption of innocence, and to ensure that the burden of proof remains on the prosecution. The privilege applies to individuals but does not extend to corporations and it can be abrogated by clear legislative intent (for example, section 172 of the model Work Health and Safety Act).

The evidence obtained in the course of the investigations is briefed to prosecutors who must determine whether or not there is a prima facie case, if there are reasonable prospects of conviction and if it is in the public interest to proceed with the prosecution. There are usually prosecutorial guidelines which provide guidance in relation to the decision to prosecute a matter.

Once a prosecution is brought, the role of the prosecutor is to fairly put before the court evidence of the alleged crime and not to merely achieve a conviction. A prosecutor has important ethical duties relating to disclosure and fairness. A prosecutor must identify with precision exactly what the defendant is accused of doing and how the prosecution intends to prove the elements of the charges brought against the defendant. They must also make full disclosure of all relevant (and possibly relevant) material, even where such material might be harmful to prosecution’s case. In contrast, a defendant is entitled to test the prosecution’s case, argue at the conclusion of that case that there is no case for the defendant to answer and say that the charges have not been made out. Unlike in civil proceedings, adverse inferences cannot be drawn against defendants that elect not to lead evidence or call witnesses.

A defendant will be found guilty or not guilty of the alleged crime. Defendants who plead guilty or are found guilty are sentenced by a court. Criminal penalties can include fines, adverse publicity orders and imprisonment for individuals. 

For further information on any of the issues raised in this alert please contact the authors below.

_{References: [1] Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993 at 53[2] X7 v Australian Crime Commission (2013) 248 CLR 92 at 104[3] Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 at 335}

This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.