Penalty and fee units are used in legislation to describe the amount of a fine or a fee.
In the state of Victoria in Australia, penalty units are used to define the amount payable for fines for many offences. For example, the fine for selling a tobacco product to a person aged under 18 is four penalty units. One penalty unit is currently $161.19 from 1 July 2018 to 30 June 2019. The rate for penalty units is indexed each financial year so that it is raised in line with inflation. Any change to the value of a penalty unit will happen on 1 July each year.
Likewise, fee units are used to calculate the cost of a certificate, registration or licence that is set out in an Act or Regulation. For example, the cost of depositing a Will with the supreme court registrar of probates is 1.6 fee units. The value of one fee unit is currently $14.45. This value may increase at the beginning of a financial year, at the same time as penalty units.
The cost of fees and penalties is calculated by multiplying the number of units by the current value of the fee or unit. The upward or downward variation of fees payable for different services across different pieces of legislation is effected through a single amendment to one piece of legislation.
In Uganda, following the hyper-inflation experienced in the 1980’s, the Currency Reform Statute, 1987 which was part of an economic restoration strategy of the National Resistance Movement Government had the unprecedented effect of reducing pecuniary penalties to such stifling sums that a re-think was ordered. It also terribly failed to curb inflation .
The Uganda Law Reform Commission and the Judiciary then devised the currency points system that was in the wake of continued inflation and other factors, able to ensure that a sound co-relation between pecuniary penalties, inflation and periods of incarceration are maintained across different pieces of legislation, and effected through a single amendment. The currency points system has also provided some sort of foundational guidance to policy formulators and drafters on how to “measure” penal provisions in legislation.
BACKGROUND & RATIONALE
Economic factors that affect and dictate the state of the economy are also bound to affect the legal system in any country, in varied ways.
The discourse on how to manage and therefore keep the legal system up to date and responsive to the other social and economic factors in the society has been going on for a while, with periodic amendments made to legislation to address this need. The result is a process of amendment that is both time consuming and human resource draining, to say the least, that is compounded by a lack of standardization and comparability in the resulting provisions.
In a Journal article reviewing the “Money in the Law” title by Professor Arthur Nussbaum, James F. Cyril quips that Anglo Saxon traditions have discouraged the attempt to build formal statements that integrate the legal and economic aspects of money so much so that there are many volumes that discuss the economic theories of money and credit, or the legal aspects of banking, negotiable instruments and trusts, but none authoritatively, as the book by Arthur Nussbaum attempts to, achieves a synthesis of the economic and legal aspects of money.
An attempt at crafting a perfect synthesis between the economic and legal system perhaps should first, if not to guide the exploration of the concept and use of penalty/fee units (as an economic measure of a legal penalty or fees), adopt a favored meaning and definition of the concept of money as it is the basic unit for economic measurement. In the book, Professor Arthur Nussbaum posits that—
“Money is a fundamental concept of law. There are few juridical notions of greater importance. Not only are specific sums of money referred to in most legal transactions, but the abstract term ‘Money’ also appears frequently in codes, statutes, judgments, contracts and wills … judgments against a defendant must be rendered in terms of money, though the plaintiff may have contracted for a non-monetary performance”.
The concept of money for purposes of this concept paper, takes the form of an immaterial legal element referred to as a penalty unit, fee unit or currency point.
An evident advantage of this approach is that it does, as indeed captured in the Hansard records during the second reading speech of the Law Revisions (Fines and other financial amounts in criminal matters)) Bill, 2006 in the Parliament of Uganda, allow for—
(a) rationalization of fines across different pieces of legislation;
(b) standardization of the ratio of fines in relation to corresponding periods of imprisonment in written laws; and
(c) easier amendment of laws as a result of inflation.
PECUNIARY FEES AND PENALTIES IN KENYA
The structure of legislation in Kenya provides for pecuniary figures directly in legislation, relating to both fees for services and penalties. The process of coming up with these fees and penalties is also not guided by a set of standards such that you can find that for criminal matters, one piece of legislation would provide for a pecuniary fine of thirty thousand shillings or incarceration for a period of three months and another piece of legislation would provide for the same pecuniary penalty but the period of incarceration is one year.
For commercial licenses and fees, the case is pretty much the same with most pieces of legislation providing in the substantive provisions or in the schedules, exact pecuniary figures that will be payable for licenses, certificates and approvals.
The process of varying these amounts through amendments to the different sets of legislation is therefore both, painstakingly difficult and time consuming exercise. The in-ability to maintain comparability between penal provisions and fees over a number of years is also common, with variations between incarceration periods and fines payable by corporations and individuals for different crimes not following any particular guideline or structure.
ADOPTING A PENALTY/FEE UNITS SYSTEM IN KENYA
Beginning 2003, the government of Kenya has continuously dedicated resources to reforming the criminal justice system. The reforms, touching on the law enforcement mechanisms, decision-making by judicial officers and improvement of incarceration conditions for convicts have in their wake brought to the fore the need to further interrogate the very foundations of the criminal justice and penal system. These, in a practical context requires an evaluation of the rationale behind the criminal justice and penal framework so that a socially and economically conscious solution to crime can be crafted.
The set of reforms so far conducted have included the development of sentencing guidelines for Judicial Officers, a process which involved extensive engagement with professionals in law enforcement. Unfortunately, these consultations did not consider the introduction of a system that would offer the benefits as elucidated already in this paper.
In offering a different, untried approach for the reform exercise of the criminal justice and penal system, this paper proposes the introduction of the penalty units system in Kenya.
The advantages of embracing the penalty and fee units system in Kenya would be that –
(a) the pecuniary penalties and fees, provided for in legislation can be varied more regularly. As noted already, inflation is a key determinant to the need for such variations especially in order to ensure that such legislation is able to deter criminal conduct. In addition, the ability to vary the fees charged for services, as made efficient by this system, will ensure that there is no underpayment or overpayment to government (at either level) for services.
(b) the system offers a uniform approach for the wholesome amendment of pecuniary penalties and fees in Kenyan laws, as opposed to the painstaking, labour intensive, ‘single legislation’ amendments that is the current practise;
(c) the system would promote comparability between pecuniary penalties and fees across different sets of legislation and help to ensure that the same is maintained through the years;
(d) there is currently no guideline on the crafting and drafting of pecuniary penalties and fees in Kenya. As part of the process of adopting this system, and indeed in order to achieve some level of comparability in legislation guidelines can be developed to assist the policy makers and drafters in coming up with pecuniary penalties and fees’ provisions;
(e) the system would provide a definite measure for converting incarceration periods into pecuniary amounts, especially where such is not provided for in the legislation prescribing the offence and a judicial officer deems it fit to instead of incarcerating a convict or in addition to the incarceration, to provide for a pecuniary penalty instead; and
(f) the system would also allow for the rate of conversion of penalties to corporate entities into pecuniary values, where a crime is committed by such a body and the penalty has not been provided for in legislation.
The process of reforming laws usually requires as an integral element, the ability of the process to adopt approaches that are progressive and in a whole result in improved legal systems and structures.
The manner of application of the penalty units in the Commonwealth of Australia, the fee units in Victoria government and the use of currency points in Uganda offer immense opportunities for learning and adoption of a similar regime in Kenya.
In adopting the system however, it would be worth considering the following salient ideas:
(a) Kenya and Australia both run some form of devolved system of governance and as is the case in Australia, the value of penalty and fee units is varied across states. These variations are as a result of the differences in the prevailing economic and social realities. Therefore, in considering the adoption of this system in Kenya, it could be necessary for the policy and legislative formulators to consider a framework that allows the devolved units, for the functions that they develop laws on, to be able to vary the value of these units accordingly.
(b) A comprehensive socio-economic study that would explore the adoption of a multiplying factor for the purposes of converting periods of incarceration into pecuniary values is necessary. The multiplying factor would allow for comparability across different pieces of legislation to be achieved, and in a case where legislation does not provide for a pecuniary penalty, it would provide the justice system with a consistent ratio for applying pecuniary penalties, when and where it is deemed appropriate.
(c) It is perhaps also important to consider that different pieces of legislation would have different values for the penalty units and fees. This allows for specialized fees and penalties to be applied, depending on the nature of service being offered or crime being penalized. A guideline for these, informed of course by a study of other jurisdictions and key sectors in Kenya would also then certainly be relevant.
(d) It is also important to consider how often the penalty units and fees will be varied.
By ensuring that these issues are considered when making an assessment based on penalty units and fees, underpayment or overpayment of penalties and fees can be avoided.
The application and use of penalty units and fees is in a very practical and measurable way, a fitting example of how a legal concept can succinctly marry and reconcile the divergent economic and legal aspects of money.
The author is a legal officer KLRC