12.1 The term “reparation” denotes both compensation and restitution. Restitution, in the narrowest sense, means the restoration of an item of property to its lawful owner. It is often used more broadly however, to include compensation, which is when an offender makes good the damage that results from the commission of a crime.1 Reparation requires the offender to indemnify the victim for the injury caused as a result of the offender’s criminal conduct.
12.2 Reparation, by linking punishment to the victim’s need for restitution or compensation, rather than to the gravity of the offender’s conduct, has traditionally posed a philosophical challenge to the idea that punishment is imposed for the breach of the State’s criminal law.2 For this reason, reparation has more commonly been regarded as an adjunct to the options available to the courts when imposing punishment on an offender.3 This is qualified to some extent in recent years by the incorporation of concerns about victims into the statutory law of New South Wales.4
12.3 Matters have progressed further in the United States where, the court must, whenever practicable order restitution as part of an increasing move to recognise victims’ concerns and victims’ needs.5 Legislation in that jurisdiction allows courts to order restitution in addition to, or in the case of misdemeanours, in lieu of, any other penalty6 and the court is required to consider “the amount of the loss sustained by each victim as a result of the offense”.7 Restitution can be a sentencing option, either by itself, or ancillary to, or in conjunction with, other sanctions. For example, the United States Sentencing Guidelines allow for restitution to be imposed as a stand-alone order in certain circumstances, but also to be imposed as a term of a probation order,8 including a remedial order, or a community service order.9
12.4 The United Nations Declaration of Basic Principles of Justice for Victims of Crime and Abuse of Power also relevantly contains the following provisions:
NEW SOUTH WALES PROVISIONS
12.5 Provisions in New South Wales deal with both restitution and compensation of victims.
- Section 126 of the Criminal Procedure Act 1986 (NSW) provides for the restitution of property stolen, embezzled or received by an offender in contravention of the Act. It simply supplies a means of restoring property to its rightful owner.
- The Victims Support and Rehabilitation Act 1996 (NSW) provides for compensation to victims. It allows a court, upon conviction, to order that the offender pay up to $50,000 to a victim for injury or loss arising from “an offence for which the offender has been convicted”.11
Both provisions can be applied in situations where there are corporate offenders and individual, identifiable victims.12 As such, the Commission is of the view that no recommendation needs to be made with respect to restitution for individual identifiable victims.
RESTITUTION FOR GROUPS OF VICTIMS
12.6 Because of the nature of some corporate activities, corporate offences do not always involve readily identifiable victims for the purposes of achieving restitution. For example, in the case of certain environmental offences, such as pollution, the harm is sometimes spread over a large group of people and may even be said to encompass the “community”.13 In some cases, the victims may not even be aware of the offence. This is also the case with respect to certain trade practices offences where the harm, for example, in the form of increased prices, is spread over a large number of consumers.14
12.7 Where the harm is spread widely, or where victims cannot be readily identified, restitution can be incidentally achieved by some of the other sentencing options that are dealt with in this Report. For example, restitution can be ordered as part of a correction order or achieved through the imposition of community service orders. However, if imposed as a sole condition of a probation order, restitution might take the emphasis away from structural reform or rehabilitation, which is understood to be the primary aim of such an order in relation to corporations.15 Some victims may also be able to recover losses as part of a group by way of representative proceedings.16
The position in the United States
12.8 The United States Federal Sentencing Guidelines for Organisations set out three ways of remedying the harm caused by corporate offenders:
- restitution orders;
- remedial orders; and
- community service orders.17
Restitution is mandatory to compensate fully the victims of certain crimes listed in the Guidelines. However, a restitution order is not mandatory when the corporation has already provided full compensation to its victims, or when the large number of victims or the complexity of the factual issues to be determined, would unnecessarily delay the sentencing process. Sentencing courts can also make payment of restitution part of a probation order.18
12.9 A remedial order, which may be imposed when a restitution order does not sufficiently address a victim’s injuries, may require the corporation “to remedy the harm caused by the offense and to eliminate or reduce the risk” of future harm from the offence. A clean-up order for an environmental violation is one example of a remedial measure.19
12.10 A court may also order community service where such a remedy is “reasonably designed to repair the harm caused by the offense”. The commentary to the Guidelines observes that community service may be an “efficient” means of remedying any harm in cases where the corporate offender “possesses knowledge, facilities, or skills that uniquely qualify it to repair damage caused by the offense”.20
12.11 It has been said that a community service order should be used when victims cannot be readily identified due to the widespread nature of the harm, or because of a delay in the manifestation of the injury. Among other things, community service orders avoid the administrative difficulty of identifying all the victims.21
The position in New South Wales
12.12 Existing New South Wales legislation provides the courts with the necessary means to achieve restitution in respect of some corporate offences. For example, the Protection of the Environment Operations Act 1997 (NSW) enables courts to:
- order compensation if a person suffered loss or damage to property as a result of the offence or if that person has incurred costs and expenses in preventing or mitigating the loss or damage;
- make “orders for restoration and prevention” with the aim to “prevent, control, abate or mitigate any harm to the environment caused by the commission of the offence” or to “make good any resulting environmental damage”; and
- order that the corporation undertake community service.22
These provisions are consistent with the United Nations Declaration of Basic Principles of Justice for Victims of Crime and Abuse of Power which relevantly provides:
In cases of substantial harm to the environment, restitution, if ordered, should include, as far as possible, restoration of the environment, reconstruction of the infrastructure, replacement of community facilities and reimbursement of the expenses of relocation, whenever such harm results in the dislocation of a community.23
CONCLUSION
12.13 The Commission is of the view that no specific provision need be made for the courts to order corporations to make restitution. This is because restitution is currently possible in New South Wales in the case of identifiable individual victims, and may also be achieved incidentally, especially in relation to broader categories of victims, by several of the other proposed alternative sanctions and orders (particularly community service orders). Such other orders may be made in circumstances where restitution is appropriate and can involve not only compensation for particular victims but could also involve such things as remedial work designed to compensate a broader range of victims or particular parts of the community.
12.14 Any changes to the law relating to groups of victims could be equally applicable to all victims, not just victims of corporate offenders, and should, therefore, be considered in that broader context. Any further development in respect of individuals or groups of victims should take place within the context of the developing law in relation to victims.
FOOTNOTES
1. Parliament of Victoria, Law Reform Committee, Restitution for victims of crime: interim report (PP 54, 1993) at xv and 13.
2. See NSWLRC DP 33 at para 10.27-10.30.
3. See, for example, Criminal Procedure Act 1986 (NSW) s 126; Crimes Act 1914 (Cth) s 21B(1); Penalties and Sentences Act 1992 (Qld) s 35(2); Sentencing Act 1995 (WA) s 110(1). See also NSWLRC DP 33 para 3.21, 10.27-10.30; Report 79 para 13.2.
4. See para 14.10.
5. F L Rush, “Corporate probation: invasive techniques for restructuring institutional behavior” (1986) Suffolk University Law Review 33 at 60.
6. 18 USC §3663(a)(1)(A).
7. 18 USC §3663(a)(1)(B)(i)(I).
8. United States Sentencing Commission, Guidelines manual (2002) §8B1.1, Commentary.
9. United States Sentencing Commission, Guidelines manual (2002) §8D1.1(a)(1).
10. United Nations, Declaration of basic principles of justice for victims of crime and abuse of power adopted by General Assembly resolution 40/34 (29 November 1985).
11. Victims Support and Rehabilitation Act 1996 (NSW) s 71 and s 77B. These provisions are generally intended to cover victims of crime (including property crime) rather than victims of violent crime who are compensated through the Victims Compensation Tribunal: see NSW, Parliamentary Debates (Hansard) Legislative Assembly, 18 November 1987, 2nd Reading, the Hon T Sheahan, Attorney General, at 16272.
12. This is because only identifiable victims are entitled to compensation: Victims Support and Rehabilitation Act 1996 (NSW) Pt 4. See also United States Sentencing Commission, Guidelines manual (2002) §5E1.1.
13. This can be seen as analogous to drug offences in the United States which, while not involving identifiable victims, may result in the court ordering “community restitution”: United States Sentencing Commission, Guidelines manual (2002) §5E1.1(d).
14. See F L Rush, “Corporate probation: invasive techniques for restructuring institutional behavior” (1986) Suffolk University Law Review 33 at 62.
15. See C A Wray, “Corporate probation under the new organizational sentencing guidelines” (1992) 101 Yale Law Journal 2017 at 2038.
16. For example, in the Federal Court: Federal Court of Australia Act 1976 (Cth) Pt 4A, Federal Court Rules 1979 (Cth) Order 73; in the Supreme Court of NSW: Supreme Court Rules 1970 (NSW) Pt 8 r 13. See also Carnie v Esanda Finance Corp Ltd (1995) 182 CLR 398.
17. See A Geraghty, “Corporate criminal liability” (2002) 39 American Criminal Law Review 327 at 341-342.
18. United States Sentencing Commission, Guidelines manual (2002) §8B1.1.
19. United States Sentencing Commission, Guidelines manual (2002) §8B1.2 and Commentary.
20. United States Sentencing Commission, Guidelines manual (2002) §8B1.3 and Commentary.
21. M L Howard, “Charitable contributions as a condition of federal probation for corporate defendants: a controversial sanction under new law” (1985) 60 Notre Dame Law Review 530, especially at 546-547.
22. Protection of the Environment Operations Act 1997 (NSW) s 245, s 246, s 250(1)(c).
23. United Nations, Declaration of basic principles of justice for victims of crime and abuse of power adopted by General Assembly resolution 40/34 (29 November 1985) Art 10.
