Calvista Australia Pty Ltd and Director of the Classification Board
[2013] AATA 91
•21 February 2013
[2013] AATA 91
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2012/0182
Re
Calvista Australia Pty Ltd
APPLICANT
And
Director of the Classification Board
RESPONDENT
Decision
Tribunal Senior Member A.K. Britton
Mr S. Webb, MemberDate 21 February 2013 Place Sydney The decision under review is affirmed.
...................[SGD].....................................................
Senior Member A.K. Britton
CATCHWORDS
CUSTOMS AND EXCISE — prohibited imports — refusal of permission to import objectionable goods — scope of power to grant permission — power to grant permission is not confined to a particular objectionable good — permission may apply to a class of objectionable goods — requirement for certainty and specificity in respect of goods to be imported — discretion-requirement to consider all relevant matters — purpose of importation — reputation — ability to comply with conditions — previous importations of objectionable goods without permission — possible breaches of State law — decision affirmed
LEGISLATION
Acts Interpretation Act 1901 (Cth) ss15AA
Classification (Films, Publications and Computer Games) (Enforcement) Act 1995 (Vic) ss 23, 23A, 24
Classification (Publications, Films and Computer Games) Act 1995 (Cth) ss 3, 5, 9
Customs Act 1901 (Cth) ss 50, 51, 229, 233Customs (Prohibited Imports) Regulations 1956 (Cth) reg 4A
Cases
Green v Daniels (1977) 51 ALJR 463
House v The King (1936) 55 CLR 499
Re Huseyin and Director of the Classification Board [2003] AATA 889
Re Moore and Attorney-General’s Department (No 2) (1995) 39 ALD 655
Re WAX and Director of the Classification Board [2003] AATA 1149Secondary Materials
National Classification Code
Guidelines for the Classification of Films and Computer Games
REASONS FOR DECISION
Senior Member A K Britton
Mr S Webb, Member21 February 2013
Calvista Australia Pty Ltd (Calvista) imports, edits and sells ‘adult’ or pornographic films. Prior to editing, some of these films are “objectionable goods” for the purposes of the Customs Act 1901 (Cth) (the Customs Act) and the Customs (Prohibited Imports) Regulations 1956 (Cth) (the Regulations). It is illegal to import “objectionable goods” without permission. Calvista applied to the Attorney-General for permission to import films of this kind. The Director of the Classification Board, who is authorised by the Attorney-General to decide such matters, refused the application. Calvista has applied for review of that decision.
Before addressing the facts and the issues in dispute, it is helpful, first, to briefly set out the legislative arrangements governing the importation and sale of films in Australia.
Legislative framework
The Customs Act provides that goods may be prohibited from importation by regulation, subject to the grant of a licence or a permission,[1] and sets out offences and penalties relating to the importation of such prohibited imports.[2]
[1] Customs Act 1901, s 50.
[2] Ibid, s 50 and s 233 for example.
Regulation 4A governs the importation of “objectionable goods”, including certain types of ‘film’. The word ‘film’ is included in the definition of ‘publication’ and it is defined to include “… any… form of recording [other than a computer game] from which a visual image, including a computer generated image, can be produced…”. The regulation prohibits the importation, without permission, of certain publications (including films) as follows —
(1A) This regulation applies to publications and any other goods, that:
(a) describe, depict, express or otherwise deal with matters of sex, drug misuse or addiction, crime, cruelty, violence or revolting or abhorrent phenomena in such a way that they offend against the standards of morality, decency and propriety generally accepted by reasonable adults to the extent that they should not be imported; or
(b) describe or depict in a way that is likely to cause offence to a reasonable adult, a person who is, or who appears to be, a child under 18 (whether the person is engaged in sexual activity or not); or
(c) in relation to a computer game — are unsuitable for a person under 18 to see or play; or
(d) promote, incite or instruct in matters of crime or violence; or
(e) promote or incite the misuse of a drug specified in Schedule 4; or
(f) advocate the doing of a terrorist act.
The regulation confers discretion on the Attorney-General or an authorised person to permit the importation of such goods –
4A(2)The importation of goods to which this regulation applies is prohibited unless a permission, in writing, to import the goods has been granted by the Attorney‑General or a person authorized by the Attorney‑General for the purposes of this subregulation.
Pursuant to this provision the Attorney-General has appointed the Director of the Classification Board as an authorised person.[3]
[3] The instrument of appointment is at T3 folio 14.
These provisions form part of the cooperative Commonwealth, State and Territory legislative scheme that governs, among other things, the importation, classification and sale of films. The Classification (Publications, Films and Computer Games) Act 1995 (Cth) (the Classification Act) is central to this scheme and it sets out classification categories for films (RC, X18+, R18+, MA15+, M, PG and G). Each category is dealt with expansively in the National Classification Code (the Code) and in the Guidelines for Films and Computer Games (the Classification Guidelines).[4]
[4] Classification (Publications, Films and Computer Games) Act 1995, s 7 and s 9.
The Code, in clause 1, sets out general principles that are to be applied and, in respect of the RC and X18+ categories, provides that —
3. Films are to be classified in accordance with the following table:
…
As can be seen, the criteria for an RC film at 1(a) and (b) in the Code are consistent with the description of goods in regulation 4A(1A)(a) and (b).
Under the national legislative scheme, each state and territory has enacted complementary classification enforcement legislation setting out, among other things, the restrictions, offences and penalties that apply to the making, possession or copying of certain kinds of films, including RC films. Under each of the classification enforcement Acts, it is an offence to sell an unclassified film without an exemption. Films that are, or would be, classified RC are prohibited imports under the terms of regulation 4A and they are not permitted to be sold, or to be copied for that purpose, in any State or Territory.
Films that are, or would be, classified X18+ are not prohibited imports. While each state maintains a ban on the sale of X18+ films, the territories do not. A licensing regime governs the sale of X18+ films in the Australian Capital Territory[5] and permits mail order distribution of such films to consumers throughout Australia.
[5] Classification (Publications, Films and Computer Games) (Enforcement) Act 1995 (ACT), Part 2, Division 2.2 and Part 6.
The brief facts
Calvista is a wholly owned subsidiary of Delecta Limited (formerly Adultshop.com Limited), a publicly listed company. Calvista was first registered on 21 February 2000, although it traded under a different incorporation prior to registration — Calvista was a business or trading name under the AXIS division of Adultshop.com Limited. Malcolm Day is a director of each of these companies, and he owns the private company Adultshop.com Pty Ltd (previously Adultshop Pty Ltd). Each company is involved in commercial activities relating to the supply of sexually oriented ‘adult’ products and services.
Calvista operates under a number of registered trading or business names, including ‘Adult Factory Outlet’, ‘Adultflix’, ‘AXIS Australia’, ‘Calvista Australia Pty Ltd’ and ‘Titanmen Australia’.[6]
[6] Exhibit R1, Attachment 16.
According to Michael Bassett, Calvista’s Chief Executive Officer, in 2011 and previous years, Calvista imported approximately 40 films per month from production studios in the United States of America and other countries. It appears that in 2001 AXIS applied for permission, unsuccessfully, to import objectionable goods. While there is scant material on this point, it appears that the 2001 application and related communications concerning possible conditions closely resemble the matters proposed in Calvista’s present application. There is no evidence that permission was granted in 2001.[7] Nonetheless Calvista and/or AXIS proceeded to import films, some of which were classified RC and were prohibited imports under regulation 4A.
[7] Exhibit R2, paragraphs [40] and [41] and Attachment 14.
In 2011, the Australian Customs Service (Customs) intercepted a number of films being imported by Calvista and issued seizure notices, including on 16, 20, 21, 22 and 29 March 2011, 19 April 2011, and 29 November 2011.[8] Some of the seized materials were later released to Calvista when it was established that they were not within the terms of regulation 4A, or there was no contravention of trademarks or copyright.
[8] Statement of Agreed Facts, 21 November 2012 at [6]; Exhibit A3 at [97]-[110]; Exhibit R1 at [75]-[80].
In 2011, Calvista made 395 applications to the Classification Board for the classification of films. Of these, 23 were classified RC. These 23 films would fall within the terms of regulation 4A and would be classed as prohibited imports. We are not able to determine how many of 395 films would have been within regulation 4A on importation, prior to editing for submission to the Classification Board. On the evidence of Mr Bassett, Danielle Vidali, Calvista’s media coordinator, and Jenna Kingi, a DVD author employed by Calvista, only a small proportion of the unclassified films that are imported are edited to remove content that may warrant an RC classification.
We note that Customs conducted compliance verification in relation to 12 self assessed clearances made by Calvista and, on 9 March 2011, notified Calvista that three of the clearances contained objectionable material and were prohibited under regulation 4A.[9] Using this as a measure, it is possible that up to 25 per cent of unclassified films imported by Calvista may be objectionable goods that would warrant an RC classification, but this is not presently established.
[9] T5 folio 16.
On 5 April 2011, solicitors acting for Calvista wrote to the Attorney-General seeking permission to import films[10] —
My client seeks permission, in writing, pursuant to subregulation 4A(2) of the [Regulations] to import films (as defined in subregulation 4A(1)) which may deal with matters of sex or violence (in the manner described by subregulation 4A(1A)(a)) of the Regulations.
The essential ground, as explained below, of my client’s application for permission is that my client proposes to take all necessary steps to ensure that the films are edited and fully compliant with the classification regime imposed by the [Classification Act] before copies are made of the films and before they are made available for sale.
[10] Ibid.
On 12 April 2011, David Emery, applications manager in the Classification Branch, circulated “a draft permission to import for Calvista we reckon we could live with (although the Director hasn’t seen it yet)” to Customs for comment.[11] It appears that Customs provided comment on 19 April,[12] and Mr Emery circulated a further draft to Customs and to Calvista on 2 May 2011.[13] The draft set out a number of conditions attaching to the proposed permission to import “Any ‘film’, as defined in regulation 4A(1) of the [Regulations], which is likely to be ‘objectionable goods’ under regulation 4A(1A)(a) of the Regulations”.[14]
[11] T9 folio 45.
[12] T9 folio 40.
[13] T7 folio 24, reference to T6.
[14] T6.
Mr Emery asked Calvista to “let me know by return email that you think you can meet the conditions set out in the document”. Mr Bassett responded the following day — “I’ve read the document and am fine with the conditions. Please proceed”.[15] On 5 May 2011, Customs advised Mr Emery that “… we support what you are proposing”.[16]
[15] Ibid.
[16] T9 folio 39.
On 30 June 2011, Ms Fitzgerald wrote to Calvista’s solicitor and sought “… an undertaking that in conducting its business activities [Calvista] will not be, to the best of your knowledge, breaching any Commonwealth, State and Territory laws”.[17]
[17] T11 folio 52.
On 16 August 2011, Mr Bassett provided the following undertaking[18] —
I, Michael Bassett, CEO of [Calvista], am authorised to undertake on Calvista’s behalf that Calvista is not, in conducting its business activities, to the best of my knowledge, in breach of any Commonwealth, State or Territory laws.
[18] T12 folio 55.
On Ms Fitzgerald’s evidence it appears that issues relating to the grant of permissions under regulation 4A were raised with the Minister for Justice on 7 October 2011 with the following result —
“The Classification Branch has received approval from the Minister for Justice to negotiate with Customs an appropriate decision-making framework for the granting of permits to import and export objectionable goods”.[19]
[19] T14 folio 59.
On 16 December 2011, the Director of the Classification Board refused Calvista’s application for the grant of a permission under regulation 4A(2).[20]
[20] T folio15.
On 16 January 2012 Calvista lodged an application for review of that decision in the Tribunal.
The permission sought
Calvista now seeks a permission in the following terms —
Any “film”, as defined in regulation 4A(1) of the Customs (Prohibited Imports ) Regulations 1956 (the Regulations), that describes, depicts, expresses or otherwise deals with matters of sex and/or violence in such a way that it offends against the standards of morality, decency and propriety generally accepted by reasonable adults to the extent that it should not be imported, being a film from any one of the following named studios:
[The studios referred to in Tab 13 of Exhibit JF-1, Digital Sin and Smash Pictures]:
but not including any film that would fall within regulation 4A(1)(b) of the Regulations.
Calvista also proposes that the permission be subject to the following conditions and any other reasonable conditions proposed by the Director :
(a) the Applicant may import films that are objectionable goods only for the purpose of submitting those films to the Classification Board for classification;
(b) the Applicant must, at least 10 days prior to each importation, provide written notice to the Respondent of the Applicant's intention to import unclassified films that may be objectionable goods (Notice);
(c) the Notice must specify the date of importation and include a list of all titles that the Applicant intends to import;
(d) the Applicant must provide the Notice and a copy of the permission to import objectionable goods to the Australian Customs and Border Protection Service at the point of importation;
(e) the Applicant must ensure that the objectionable goods are modified in a bona fide attempt to comply with classification requirements and submitted for classification to the classification Board within three months of importation;
(f) the Applicant must not reproduce any material contained in the objectionable goods that is likely to be refused classification, unless necessary for the purpose of modifying that material to comply with classification requirements;
(g) the Applicant must not release into the community any objectionable goods containing material that is likely to be refused classification;
(h) the Applicant must, within one month of receiving notice from the Classification Board that the objectionable goods have been refused classification:
(i) destroy the objectionable goods; or
(ii) modify the objectionable goods to be resubmitted for classification;
(i) the Applicant must, within three months of importation, destroy any material that is likely to be refused classification;
(j) the Applicant must, on request from the Respondent:
(i) report on any aspect of compliance with the permission to import objectionable goods; or
(ii) provide the Respondent with a list of all films imported under the permission to import objectionable goods.
Issues
There are three primary questions to be addressed:
a.can the permission sought by Calvista be granted; and if so
b.is it appropriate to grant the permission; and if so
c.what, if any, conditions should be imposed.
The parties agree that that if the answer to the first two questions is yes, the Tribunal should remit the decision to the Director, to enable the parties to negotiate and agree upon suitable conditions.
Can the permission sought by Calvista be granted?
This is a question of principle and construction concerning the discretion to grant permission to import prohibited goods under s 50 of the Customs Act and under regulation 4A.
Calvista says that there is no bar in the Customs Act or in the Regulations that would prevent a decision-maker from granting the permission sought, notwithstanding that the specific details of each film that would be imported are not known at the time of grant. On Calvista’s reasoning, the legislation does not require each film to be examined prior to the grant of permission to import it. Calvista maintains that a permission of the kind proposed is entirely consistent with the inter-governmental arrangements regulating objectionable material that is, or would be, classified RC.
There is nothing in the legislation, Calvista asserts, that requires a narrow reading of the power to grant a permission under s 50 of the Customs Act or under regulation 4A(2).
The Director asserts that regulation 4A(2) does not authorise the grant of a permission of the type sought by Calvista, which she characterises as a “rolling commercial permission”, because the nature of the specific goods to be imported cannot be assessed prior to the grant of the permission. In order to properly exercise the discretion, it is necessary, so the argument goes, to consider the nature and content of the goods — it would not be appropriate to grant a permission to import objectionable goods without first understanding and properly considering the particular characteristics of the goods, or the class of goods in which they are included, to which the permission relates.
Furthermore, the Director asserts that the discretion is essentially preconditioned by an assessment that the particular goods covered by the permission sought are goods to which regulation 4A applies. An assessment of this kind cannot be made without either inspecting the goods or considering information about the nature of the goods that is sufficiently detailed to enable an assessment to be made. In support of this proposition, the Director relies on previous decisions of the Tribunal in Re Huseyin and Director of the Classification Board[21] and Re WAX and Director of the Classification Board.[22]
[21] [2003] AATA 889.
[22] [2003] AATA 1149.
The Director maintains that the Tribunal’s decision in WAX’s case supports the proposition that the discretion should be exercised sparingly, in exceptional cases, having regard to the matters set out in regulation 4A(2AA) and only in respect of specific objectionable goods or classes of objectionable goods. On the Director’s reasoning, the power to grant permission under regulation 4A(2) must be construed, on the plain language of the text, in relation to the general prohibition it excuses.
In the Director’s submission, the discretion to grant a permission should be construed in a manner that is consistent with the purpose of the harmonised regulatory scheme, including the general rule in regulation 4A(2), to protect standards or morality, decency and propriety. On the Director’s reasoning these purposes and the purposes of s 50 of the Customs Act would be defeated or undermined by the grant of an imprecise and open-ended permission, such as that sought by Calvista.
The Director also contends that the grant of the permission sought by Calvista would involve a de facto abdication of the discretion conferred on the Attorney-General and the Director (and presently the Tribunal). Under such a broad permission, the power to determine whether specific objectionable goods should be excused from the general prohibition on importation would devolve to Calvista. An arrangement of that kind, in the Director’s submission, exceeds the authority conferred by regulation 4A(2).
A decision-maker exercising a statutory discretion must do so by applying relevant legal principles or rules, and must take into account all relevant considerations and exclude extraneous matters[23]. Subject only to those factors, the discretion cannot be self-fettered by the relevant decision-maker. A decision-maker is entitled neither to purport to exercise a discretion according to inflexible guidelines nor to fail or refuse to exercise the discretion[24].
[23] House v The King (1936) 55 CLR 499.
[24] Green v Daniels (1977) 51 ALJR 463; [1977] HCA 18.
Section 15AA of the Acts Interpretation Act 1901 (Cth) requires that:
In interpreting a provision of an Act, the interpretation that would best achieve the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) is to be preferred to each other interpretation.
The primary purpose or object of the Customs Act is to create a statutory regime for the administration and control of the import and export of goods into and out of Australia. Under that regime, most goods may be imported, subject to conditions such as the lodgement of proper declarations and documentation, the payment of relevant duties, examination by relevant authorities and compliance with relevant Australian standards.
Certain goods or classes of goods, however, may be prohibited from importation under s 50 of the Customs Act. The prohibition may be absolute, in which case the goods may not be imported in any event, or it may be applied in specific circumstances or unless specific conditions and restrictions are complied with.
Regulation 4A gives effect to s 50 of the Customs Act and, in respect of ss 50(2)(c) and 50(3), it confers discretion to grant permission to import objectionable goods which are otherwise prohibited from importation. The discretion must be construed in the context of the legislative scheme regulating the importation of goods that is established by the Customs Act and the Regulations, and the purposes of s 50 must be given full weight. In this regard, regulation 4A is broadly consistent with other similar permissive provisions in the Regulations, see regulation 5H for example.
On the plain language of s 50, the discretion to grant import permission under regulation 4A extends to “the goods or a class of goods in which the goods are included”[25]. It follows that permission may be granted to import goods within a class of goods under any combination or subset of subregulations 4A(1A)(a) to (f). Even though there is no express limit on the number or the kinds of objectionable goods that may be permitted to be imported under regulation 4A, the use of the definite article suggests that specificity is required in respect of “the goods” in each case.
[25] Customs Act 1901, s 50(3).
The requirement for specificity is reinforced by the exceptional nature of the discretion. It requires the Attorney-General or an authorised person to determine whether the goods intended for importation should be excepted from the prohibition that otherwise would apply. This requires consideration of the particular goods to which the permission sought relates. It is not a decision that can simply be surrendered or devolved to the importer. Doing so may abrogate the statutory duty of the person authorised to exercise the discretion and it would, in effect, transform the exception into the default position for the importer. Even if Calvista was able to strictly comply with stringent conditions and its reputation was unimpeachable — a question to which we will come below — such a self-regulatory scheme is not consistent with the statutory scheme governing prohibited imports or with the underlying legislative policy.
It does not follow, however, that the discretion should only be exercised in exceptional circumstances — the discretion is not expressly fettered in that way. Each case must be assessed on its merits, having due regard to all the matters set out in regulation 4A(2AA).
Thus, in principle, while there is no legislative bar that precludes the grant of permission to import goods within a class of “objectionable goods” under regulation 4A, specificity is required in respect of the particular goods to be assessed when deciding whether to permit their importation. Proper exercise of the discretion is preconditioned by sufficiently detailed and reliable information concerning the particular goods to which the permission sought relates. The decision-maker must be reasonably satisfied that the goods the prospective importer seeks permission to import are prohibited imports within the terms of the permission sought. Sufficient information about the goods must be provided to enable the decision-maker to assess all matters that are relevant to exercise of the discretion under regulation 4A(2).
Calvista’s application refers, generally, to a class of goods, being “objectionable” films from nominated studios[26] that deal with matters of sex and/or violence in a manner that offends against the standards of morality, decency and propriety generally accepted by reasonable adults, within the terms of regulation 4A(1A)(a). Conceivably, films of this nature may have sufficient characteristics in common to constitute a class of goods that is essentially defined and delineated from other goods or classes of goods (including other species of film) by the characteristics of its content.
[26] The suppliers are identified in Exhibit R1, Tab 13 and include Digital Sin and Smash Pictures.
No specific information about the actual films that Calvista seeks permission to import has been provided. Under the conditions Calvista has proposed, notice of its “intention to import unclassified films that may be objectionable goods”, including the title of each film, would be provided 10 days prior to importation. It is difficult to understand how any film could reliably be placed within the proposed class of goods, and hence within the terms of the permission sought, without an assessment of its contents prior to importation. This would need to be undertaken on a case by case basis.
Take for example a film containing a depiction of a revolting or abhorrent phenomenon that is within the terms of regulation 4A(1A)(a), or a film containing a depiction of a person who is or who appears to be under 18 engaging in sexual activity that is within the terms of regulation 4A(1A)(b). These films would not be within the class of goods covered by Calvista’s application and they would not be permitted to be imported. In order to make that assessment and to decide whether to permit the film to be imported, it would be necessary to have regard to the content of the film prior to importation.
Similarly, a film containing real depictions of actual sexual activity between consenting adults that is or would be classified X18+ would not be within the terms of regulation 4A, or within the terms of the permission sought. It would not be appropriate for Calvista to seek permission under regulation 4A to import a film of this kind, and it would not be permissible for an authorised person to grant permission under regulation 4A for it to be imported. But the proper characterisation or class of the film would not be known, and a decision about whether permission may be granted to import the film could not be made, until an assessment of its content had been undertaken.
Thus, in order to exercise the discretion, and to ascertain whether or not any particular film is within the class of goods Calvista seeks permission to import, it is necessary for an assessment of the content of the film to be made. In our opinion, this cannot properly be addressed in general terms. Films are unique artefacts. Unless Calvista makes a properly formed concession that each film is “objectionable” for the purposes of the Regulations and that the film conforms to the particular class of goods it seeks permission to import, it is difficult to see how the decision-maker could exercise judgment in relation to these threshold questions. It is one thing to seek permission to import a class of goods described by reference to some of the terms of regulation 4A; determining whether the particular goods that would be imported conform to the class description and may be permitted to be imported is entirely another. These matters cannot properly be decided in the abstract, without reference to the particular goods. The terms of the present proposal make no provision for this to occur.
The answer to the first question of principle, can the permission sought be granted, is No.
Nevertheless, should we be incorrect in that conclusion, we now turn to the next issue.
Should the permission sought be granted?
This is a question of merit.
In determining whether the permission sought by Calvista should be granted we must have regard to the matters set out in regulation 4A(2AA) —
(2AA) In considering whether to grant a permission under subregulation (2), the Attorney General or the person authorised by the Attorney General is to have regard to:
(a) the purposes for which the goods are to be imported; and
(b) the extent to which the person to whom any permission to import the goods would be granted conducts activities of an artistic or educational, or of a cultural or scientific, nature to which the goods relate; and
(c) the reputation of the person referred to in paragraph (b), both generally and in relation to an activity referred to in that paragraph; and
(d) the ability of that person to meet conditions that may be imposed under subregulaton (3) in relation to the goods; and
(e) any other relevant matters.
In Calvista’s submission, when the matters set out under regulation 4A(2AA) are considered, there is no good reason to refuse the grant of permission in the terms sought. The Director does not agree and says that the application lacks merit and should be rejected.
In considering whether to grant the permission sought we have assumed that it would be subject to conditions at least as stringent as those proposed by Calvista in these proceedings.
The purposes for which the films are to be imported
Calvista contends that the purpose of seeking the permission to import objectionable films containing offensive depictions of sex and/or violence is solely to excise the objectionable material and to submit the edited film for classification.
It is self-evident that Calvista’s purposes are primarily commercial. It is in the business of importing and distributing films for commercial gain. In order to do so lawfully, the films must first be imported and classified in a category that may be legally be reproduced, sold and distributed. Calvista’s purpose in seeking permission to import films dealing with sex and/or violence within the terms of regulation 4A includes the commercial purpose of bringing into existence film products that it can lawfully sell and distribute in Australia. It is also seeking to “avoid any inadvertent breach of the customs legislation”.[27]
[27] T5 folio 18.
Although Calvista’s application relates only to master or time-code copies of individual films, the precise number of individual films that would be imported under the permission, if granted, is not presently established. Thus, in short, for what are ultimately commercial purposes, Calvista proposes to import potentially large numbers of individual “objectionable” films for modification and classification by the Classification Board.
In Re Moore and Attorney-General’s Department (No 2) (1995)[28] Mr Moore sought permission to import commercial quantities of a book for general release. The Deputy President said that the regulation does not contemplate the granting of permission “to allow wholesale importation such as that sought by Mr Moore” for the “very general purposes proposed”, as to do so “would ultimately lead to circumvention of the legislative scheme that is designed to prohibit the importation of goods classified in this category”.[29] While Calvista’s proposal to import objectionable goods may have a commercial character and scale, it is distinguished from Moore’s case in one important regard – Calvista is not proposing to release or distribute prohibited imports into the Australian community. Under its proposal, only modified and properly classified films would ultimately be released for sale in full compliance with Commonwealth, State and Territory laws.
[28] 39 ALD 655
[29] Ibid. at 658 .
Calvista contends that a public benefit would flow from the granting of the permission sought: it is said that permitting Calvista to import objectionable films for the purpose of editing and submitting them to the Classification Board will result in objectionable content being excised and such products being lawfully available to Australian consumers. This, it is claimed, will support the national classification arrangements under the cooperative Commonwealth, State and Territory legislative scheme and thereby protect the community at large from the risk of exposure to material that offends against the standards of morality, decency and propriety generally accepted by reasonable adults. It may also protect consumers of adult sexual films from exposure to material that may be harmful or abhorrent.
Calvista maintains that the full range of sexual material, including the most heinous and abhorrent content, is openly available on the internet, including on foreign services available in Australia, and that unclassified films are distributed by unscrupulous operators, including grey importers and black market traders, operating outside the classification regime without prosecution and in breach of copyright. It asserts that the grant of permission in the terms proposed may assist to counter activities of this kind, and is in the public interest.
The stated purpose for which the goods are to be imported in our view weighs in favour of the grant of the permission sought.
The extent to which Calvista conducts activities of an artistic or educational, or of a cultural or scientific, nature to which the goods relate
In support of its application, Calvista points to charitable and educational activities it has conducted, for example in relation to breast cancer, HIV Aids and sex education.
We note the positive comments made by people and organisations Calvista has worked with or assisted, with financial donations for example.
It is not established, however, that the goods that would be imported if permission is granted are related to charitable activities of this kind.
While some of the films Calvista has submitted for classification have been found to contain educational elements[30] in these proceedings Calvista did not seriously contend that the films it is seeking permission to import relate to educational activities.
[30] Exhibit R1, Tabs 7-13 inclusive.
These considerations are at the margin and they do not weigh for or against the exercise of the discretion.
Neither Calvista nor Mr Bassett claim to be engaged in any form of high artistic, scientific or cultural activity, or that the films to be imported have artistic merit. Beyond the fact that the films it seeks permission to import are likely to be so egregiously offensive because of their sexual or violent content as to fall foul of regulation 4A, Calvista does not even know what other content there may be in these films.
Under Calvista’s proposal, the films to be imported would be edited and submitted for classification. There is a question whether these kinds of activity are within the meaning of artistic, educational, cultural or scientific activity for the purposes of regulation 4A. The legislation provides no guidance as to the meaning of these terms. Conceivably at least, on a broad interpretation, the editing and classification of films for public sale and national distribution, even pornographic films without any artistic merit, may be within the meaning of cultural activity or scientific activity.
If this is correct, these considerations weigh in favour of the application.
Reputation of Calvista
Calvista asserts that it has a good reputation, operating over many years as a law abiding business with no criminal record. It says that it is the largest supplier of adult films for classification in Australia, asserting that it operates in compliance with relevant Commonwealth, State and Territory laws and it has paid over $5 million in classification fees over the last several years.
73. Calvista contends that its activities in supporting community organisations and distributing sex education materials, together with its active role in enforcing copyright in the adult industry, is further evidence of its good reputation.
In order to properly assess Calvista’s reputation it is necessary to consider its activities over preceding years.
In 2001, AXIS (which is presently a trading name owned by Calvista) sought the grant of a permission to import objectionable goods under regulation 4A. There is no evidence that the permission was granted. Nevertheless, it appears that Calvista proceeded to import films, some of which were objectionable goods, without permission. While the precise number cannot be determined, the evidence of Mr Bassett and Ms Fitzgerald reveals that a proportion of the films imported by Calvista prior to editing and submitting for classification would have constituted “objectionable goods” within the meaning of regulation 4A(1A).
Calvista’s conduct of importing objectionable goods without permission, and therefore unlawfully, despite its clear knowledge from August 2001 that permission was required, goes to its reputation generally. This weighs against the grant of permission.
The Director asserts that Calvista’s actions in importing films that are or would be classified RC or X18+ for editing in its Melbourne premises raises the possibility that breaches of the Classification (Publications, Films and Computer Games) (Enforcement) Act 1995 (Vic) (the Victorian Act) may have been committed. Calvista disagrees.
These matters concerning possible breaches of the Victorian Act are not for us to decide and they are not, of themselves, determinative. It may be that Calvista is operating within the law in Victoria, albeit perhaps sailing close to the wind, but these are matters of some uncertainty. The absence of prosecution by the Victoria authorities does not advance the matter.
During the hearing much was said about the relationship between Calvista, Delecta Ltd and Adultshop.com Pty Ltd, and the reputation of Mr Day and the extent of his involvement in Calvista. As noted Mr Day is the owner of Adultshop.com Pty Ltd and a director of Calvista and Delecta. On the available evidence we are unable to form a view about Mr Day’s character or reputation, or the extent to which he is actively involved in Calvista’s operations or business activities. These matters in respect of Mr Day do not shed light on Calvista’s reputation.
On 31 January 2012 and 25 January 2012 the ACT Government issued X18+ film licences to Calvista and to Adultshop.com Pty Ltd[31] respectively. Each licence covered the period 1 February 2012 to 31 January 2013 and permits the holder to sell X18+ films from 10 Ipswich Street, Fyshwick — Calvista’s premises in Canberra. Mr Bassett testified that Calvista and Adultshop.com Pty Ltd are separate business entities and neither engage in joint business activities nor share common premises. His explanation proffered for the apparent discrepancy between that claim and the evidence of the two companies apparently using the same address at least for licencing purposes, in our opinion was unsatisfactory. What lies behind these licences we are unable to determine, but the absence of a satisfactory explanation from Mr Bassett is troubling and leaves open the possibility that the relationship between Calvista and Adultshop.com Pty Ltd is closer than Mr Bassett is willing to concede. This raises questions about the reliability of Mr Bassett’s evidence; and does not assist Calvista’s application.
[31] Exhibit R1, Attachment 16.
Balancing all of these matters, in our opinion, Calvista’s reputation, generally and in relation to the activities set out in regulation 4A(2AA)(b), does not weigh in favour of the grant of permission.
Ability of Calvista to meet conditions that may be imposed
Calvista says that it is willing and able to comply with conditions, such as those proposed set out in [26] above. In the course of the hearing, Calvista gave further undertakings in respect of the scope of the permission sought and conditions with which it says it could and would comply.
It is probable that Calvista has imported films within the terms of regulation 4A without permission, at least one of which contained revolting or abhorrent phenomena that warranted an RC classification,[32] placing it outside the terms of the permission presently sought. It is not clear, under the terms of Calvista’s proposal, how such a film would be identified prior to importation. Thus, at the first mark there are questions about Calvista’s ability to comply with the threshold terms of the permission sought.
[32] Exhibit R1, tab 24.
Consideration of Calvista’s past conduct raises further questions about its ability to comply with any conditions that may be imposed.
We were taken to several striking examples in which Calvista failed or omitted to excise content that clearly exceeded the classification standards under the X18+ category before submitting films it had imported and edited for classification, causing the films to be classified RC. It is conceivable that such omissions or failings are the innocuous fault of a high volume business, as Mr Bassett suggests. Whether that is correct or not, these are matters that go to Calvista’s ability to meet any conditions imposed, and to its reputation in matters relating directly to objectionable goods that it imported, albeit without permission.
On balance, Calvista’s past conduct raises serious questions about its ability to comply with conditions that may be imposed. This weighs against the grant of the permission sought.
Other relevant matters
Regulation 4A(2AA) requires us to consider any other relevant matters.
One such matter is the extent to which the permission sought, if granted subject to the conditions proposed, is consistent with the harmonised Commonwealth, State and Territory legislation governing the sale and distribution of films in Australia.
Under the terms of Calvista’s proposal, public authorities would have little or no control over the potentially large volume of objectionable goods that would be permitted to be imported, and would exercise a monitoring role in respect of compliance. Even though the proposed conditions contain a number of safeguards designed to ensure that any objectionable material is destroyed, there is a risk that such material may be imported and released under an arrangement of this kind. It is far from clear that the level of risk is consistent with the purposes of the national regulatory scheme for films (and related public expectations).
Conclusion
In our opinion films regarded as so offensive to contemporary community standards as be adjudged “objectionable” for the purposes of the Customs Act and Regulations ought only be permitted to be imported under very strict conditions by persons or bodies who may be trusted to comply fully with those conditions. It is self-evident that if those conditions were not met, there is a risk that “objectionable goods” imported under the permission might be released to the Australian market.
A key factor in considering whether to grant the permission sought is, therefore, the likelihood that the conditions would be complied with. Calvista’s reputation and willingness and capacity to meet any proposed conditions are highly relevant to that determination. While it would be in Calvista’s self-interest to ensure that the conditions were met, if for no other reason than to ensure that the permission is not revoked, a number of factors lead us to conclude that there is a risk that this might not occur. These include as discussed above the lack of judgement demonstrated by Calvista staff in submitting for classification films that plainly exceed the X18+ classification standard and Calvista’s conduct in importing objectionable goods without permission over an extended period.
Calvista contends that the permission would facilitate its ability to make available to consumers of adult films in Australia properly classified films of that kind. To the extent this might deter consumers from turning to unclassified material, this arguably bolsters the regulatory regime designed to protect consumers of such products and the community in general. Furthermore, Calvista asserts that its activities asserting copyright in respect of the films it imports may deter unscrupulous operators from trading in grey imports that have not been classified. To the extent that this is correct, it may support the national regulatory arrangements for films and the protections they provide. While this factor favours Calvista’s application, it is outweighed in our opinion by the risk that, inadvertently or otherwise, the conditions imposed might not be complied with.
Weighing all these considerations we conclude that the scales are tipped against the exercise of the discretion. Negative aspects of Calvista’s reputation, and doubts about its ability to comply with conditions, outweigh the positive aspects we have identified. For these reasons we have decided that the preferable decision it to refuse to grant the permission sought.
The answer to the second question, should the permission sought be granted, is No.
Decision
The decision under review is affirmed.
I certify that the preceding 95 (ninety five) paragraphs are a true copy of the reasons for the decision herein of Senior Member AK Britton, Mr S Webb, Member
......................[SGD]..................................................
Associate to Senior Member Britton
Dated 21 February 2013
Date of hearing 4 December 2012 Counsel for the Applicant Stephen Lloyd SC Solicitors for the Applicant Middletons Solicitors for the Respondent Nick Gouliaditis, Australian Government Solicitor
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