Interville Technology Pty Ltd v Commonwealth Office of the Director of Public Prosecutions
[2009] FCA 481
•8 May 2009
FEDERAL COURT OF AUSTRALIA
Interville Technology Pty Ltd v Commonwealth Office of the Director of Public Prosecutions [2009] FCA 481
COPYRIGHT – appeal from sentence by Local Court of New South Wales for offences under section 132AJ(1) of the Copyright Act 1968 (Cth) – sentencing principles – “totality” principle – consideration of other offences contained in a schedule pursuant to section 16BA of the Crimes Act 1914 (Cth)
Copyright Act 1968 (Cth) s 132AJ(1)
Crimes Act 1914 (Cth) ss 16A, 16BAAFP v Natcomp Technology Australia (unreported, Downing Centre Local Court, 18 July 2006) referred to
Cameron v The Queen (2002) 209 CLR 339 referred to
Director of Public Prosecutions Cth v Said Khoda El Karhani [1990] 21 NSWLR 370 referred to
Hamm v Middleton (1999) 44 IPR 656 referred to
Kam Lai-Ha v McCusker (2000) 49 IPR 44 followed
Le v R (2007) 74 IPR 1 referred to
Siganto v the Queen (1998) 194 CLR 656 referred to
Vu v New South Wales Police Service (2007) 73 IPR 531 referred toINTERVILLE TECHNOLOGY PTY LTD (ACN 099 833 619) v COMMONWEALTH OFFICE OF THE DIRECTOR OF PUBLIC PROSECUTIONS
NSD 1945 of 2008
JACOBSON J
8 MAY 2009
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 1945 of 2008
ON APPEAL FROM THE DOWNING CENTRE LOCAL COURT
BETWEEN: INTERVILLE TECHNOLOGY PTY LTD (ACN 099 833 619)
Appellant
AND: COMMONWEALTH OFFICE OF THE DIRECTOR OF PUBLIC PROSECUTIONS
Respondent
JUDGE:
JACOBSON J
DATE OF ORDER:
8 MAY 2009
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The appeal be allowed.
2.The penalty to be imposed in lieu of the figure of $80,000 handed down by Magistrate McIntosh on 25 November 2008 be a fine of $30,000 in respect of sequences 21 to 40.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using the Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 1945 of 2008
ON APPEAL FROM THE DOWNING CENTRE LOCAL COURT
BETWEEN: INTERVILLE TECHNOLOGY PTY LTD (ACN 099 833 619)
Appellant
AND: COMMONWEALTH OFFICE OF THE DIRECTOR OF PUBLIC PROSECUTIONS
Respondent
JUDGE:
JACOBSON J
DATE:
8 MAY 2009
PLACE:
SYDNEY
REASONS FOR JUDGMENT
BACKGROUND
This is an appeal against the severity of sentences imposed on the appellant, Interville, for 20 offences of copyright infringement under section 132AJ(1) of the Copyright Act1968 (Cth). That section provides that a person commits an offence if the person possesses an article with the intention of, inter alia, offering or exposing it for sale or hire to obtain a commercial advantage or profit.
At the time when the offences were committed, the relevant section of the Copyright Act was section 132(1)(a), but that subsection was repealed and replaced by section 132AJ(1) prior to the time when the matter came before the Court.
The relevant facts were recorded in a statement of facts by the Australian Federal Police. This document shows that on 6 October 2005, investigators from the Australian Federation Against Copyright Theft attended Interville’s premises after receiving information from a member of the public concerning the alleged availability of infringing cinematograph films being hosted and distributed over Interville’s intranet. The informant alleged that Interville had over 50 computers on site and the owner had a substantial quantity of file space of illegally copied music and movies from the Internet which was available for its customers to download. According to the informant, the customers paid $3.00 per hour to access the facilities.
The premises which were attended by the AFACT investigators were an Internet café. The business of providing Internet services was the main business conducted by Interville, and the business of hosting and distributing infringing copyright material was evidently a sideline of the business rather than its primary activity. The inspection carried out by the AFACT investigators indicated that there were approximately 160 movies available for download, and that some of Interville’s staff provided instruction on how to download the movies.
There were further attendances by the AFACT investigators in 2005, 2006 and 2007, but it was not until 5 August 2007 that the matter was referred to the Australian Federal Police.
On Tuesday 18 December 2007, a search warrant was executed under section 3E of the Crimes Act 1914 (Cth) on the premises of Interville, which are located at a shop premises in the World Square complex at Liverpool Street, Sydney. A quantity of servers was seized at that time, and the statement of facts indicates that in excess of 100 copyright files which comprised movies, music and television shows were on the servers and were apparently available for viewing.
THE PROCEEDING AT FIRST INSTANCE
The offences against Interville were recorded in 20 sequences numbered 21 to 40. Originally there were 20 other sequences numbered 1 to 20 which were listed in the Court Attendance Notice.
The matter came on before Magistrate McIntosh on 25 November 2008. His Honour was told on that date that shortly before the hearing, the Crown had withdrawn the original 20 sequences and replaced them with a fresh set of 20 sequences.
Interville pleaded guilty before Magistrate McIntosh on 25 November 2008 to the 20 offences of possessing an infringing article with the intention of distributing it to obtain a commercial advantage contrary to section 132AJ(1)(a)(vi) of the Copyright Act.
His Honour also took into account when determining the penalty to be imposed the original 20 sequences, which were listed in a schedule pursuant to section 16BA of the Crimes Act.
The maximum penalty for an offence under section 132AJ(1)(a)(vi), if dealt with on an indictment, is a term of imprisonment of up to five years and/or a fine of up to $60,500. In the case of a corporate offender, section 4B(3) of the Crimes Act provides for a maximum fine of up to five times the normal amount, which would take the figure to $302,500.
However, in this case, the offences were dealt with summarily pursuant to section 4J(1) of the Crimes Act. The effect of this was that the maximum penalty was $33,000 for Interville as a corporate offender for each of the offences. His Honour imposed a fine of $42,000 on sequence 21. In doing so, his Honour took into account the 20 offences in the section 16BA schedule. His Honour then proceeded to impose a fine of $2,000 on each of the 19 sequences numbered 22 to 40. That came to a total of $38,000, so that the total combined sentences consisted of fines of $80,000.
On the hearing of the appeal, the Crown has conceded that the penalty for sequence 21 was in error and must be reduced. This is because section 16BA(4) of the Crimes Act provides that in the present circumstances, the fine was not to exceed the maximum penalty that the Court would have been empowered to impose on the offender for the particular offence if no other offences had been taken into account under section 16BA. Thus, the maximum penalty which could have been imposed for sequence 21 was $33,000.
The Crown also conceded before me that it had inadvertently misled his Honour when reference was made to a comparative case of AFP v Natcomp Technology Australia (unreported, Downing Centre Local Court, 18 July 2006). The Crown, when putting its submissions before the Magistrate, mistakenly stated that the penalty imposed in the Natcomp matter had been a total of $20,000, whereas in truth the total was $8,000.
Mr Lancaster, who appeared for Interville, accepts that the concessions made by the Crown are correct, and accepts that the Crown misled the Magistrate, albeit quite inadvertently.
I have before me the transcript of the proceeding before Magistrate McIntosh on 25 November 2008. His Honour dealt with the matter very late in the afternoon, after a lengthy day dealing with a large number of traffic offences. That is, of course, not to be taken as being criticism of his Honour, but rather it demonstrates the pressure under which the Magistrate was when he came to consider the question of sentencing.
The transcript records that his Honour’s initial reaction was to impose a fine of $7500 for sequence number 21 and $500 for each other matter. That would have brought the total sentence to a figure of $17,000.
However, it was at that point that the Crown made reference to the Natcomp matter, and errantly described the total fine in the matter at $20,000. In light of this, the Magistrate said that he would “have to up the ante.” His Honour then dealt with the matter, and made his remarks on sentencing which appear at pages 77 to 78 of the Appeal Book.
I will not set out the remarks in full, but his Honour observed that these offences are becoming common in the film, television, and music industries, and call for heavy penalties to be imposed. His Honour observed that he was dealing with serious offences which call for heavy penalties to be imposed to “get the message out” that film and music piracy is not to be countenanced.
His Honour took into account a number of matters which he was required to consider in determining the penalties to be imposed. His Honour took into account the fact that Interville had pleaded guilty at the very first opportunity; that copyright piracy was not the main part of Interville’s business, which was the operation of an Internet café, and that the copyright infringements were “a by-product” of the business.
His Honour also took into account the fact that he was asked to make a forfeiture order in relation to certain hardware, which was said to have a replacement value of $15,000. Moreover, he took into account the financial situation of the company which showed that it was a comparatively small business, with a net profit in its accounts for the year ending 30 June 2008 of approximately $21,000.
As I have said, his Honour took into account in determining the penalty for sequence 21 the 20 matters set out in relation to section 16BA of the Crimes Act, and what he had been told about the effect of the decision in Natcomp.
THE APPEAL
In considering the question of the severity of the sentence, I am required to have regard to the matters set out in Part IB of the Crimes Act and, in particular, the matters set out in section 16A. Section 16A(2) sets out a non-exhaustive list of matters which the Court is required to take into account.
The relevant principles have been referred to in a large number of cases. The decision of the NSW Court of Criminal Appeal in Director of Public Prosecutions Cth v Said Khoda El Karhani [1990] 21 NSWLR 370 contains useful discussion of the relevant principles commencing at page 377. The principle of general deterrence which should be taken into account in determining the sentence was discussed in that decision. Reference was also made to this in the decision of Von Doussa J in Hamm v Middleton (1999) 44 IPR 656.
The overriding principle which determines the sentence to be passed is set out in section 16A(1) of the Crimes Act. This provides that the Court must impose a sentence or make an order that is of a severity appropriate in all the circumstances of the offence.
The helpful submissions of the Crown referred me to the second reading speech of the introduction of the Copyright Bill on 16 May 1968, and to the second reading speech of amendments to the Copyright Act on 21 May 1986, when the new anti-piracy offence in section 132 was introduced. The second reading speeches emphasised the importance of the protection of copyright, and the imposition of appropriate penalties, having regard to the harm to the community which results from undermining the work of creators and innovators, as well as the loss of tax revenue which arises from copyright piracy.
Section 16A(2)(c) of the Crimes Act provides that one of the matters which the Court must take into account is whether the offence forms part of a course of conduct consisting of a series of criminal acts of the same or similar character. In that event, the Court is to take into account the course of conduct. This was referred to in Hamm v Middleton at [15]. That subsection is relevant in the present case, because the Crown submits that the appellant’s offending conduct persisted throughout the period of 6 October 2005 to 18 December 2007.
A further matter which the Court must take into account is set out in section 16A(2)(g), under which the Court is required to take into account the fact that the person has pleaded guilty to the charge in respect of the particular offence.
There have been a number of observations by the courts on the fact that a plea of guilty is ordinarily a matter to be taken into account in mitigation, because it is usually some evidence of remorse, and in particular, the community is spared the expense of a contested trial: see, eg, Siganto v the Queen (1998) 194 CLR 656 at 663-4, Cameron v The Queen (2002) 209 CLR 339 at [22].
In the written submissions for Interville, reference was made to three decisions which are of assistance in determining the appeal. The first is a decision of Rares J in Vu v New South Wales Police Service (2007) 73 IPR 531. At [57], his Honour there observed that it is impossible to have regard to each of the matters referred to in section 16A(2) separately. Rather, the Court has to approach the determination of a sentence by taking into account all of the matters that are relevant. His Honour also said that in general, the sentencing court will reach a conclusion that a particular penalty is the one that should be imposed after weighing all of the relevant factors.
Interville also referred to Le v R (2007) 74 IPR 1 at [20], in which the Court recorded the submissions of the Crown in relation to the matters to be taken into account. In particular, reference was made at subparagraph 29 of [20] to the need to weigh all relevant factors and in doing so to avoid a mathematical approach in which there are increments to or decrements from a predetermined range of sentences.
The third decision to which Interville referred was the decision of Emmett J in Kam Lai-Ha v McCusker (2000) 49 IPR 44 at [9]. There, Emmett J observed that
when a number of offences are being dealt with and specific punishments in respect of them are being totted up to make a total it is always necessary for the Court to take a last look at the total to see whether “it looks wrong.”
The Court must look at the totality of the criminal behaviour and ask itself what is the appropriate sentence for all of the offences. His Honour there referred to the decision of the High Court in Mill v The Queen (1988) 166 CLR 59 at 63, where the High Court made reference to the principle of totality stated in the leading text of Thomas, Principles of Sentencing.
It seems to me that in the present case, the essential error which was made by the Magistrate was that his Honour failed to have regard to the principle of totality. His Honour took into account most of the matters which were put to him by Mr Lancaster, but he fell into error, albeit inadvertently, at least in part because of the inadvertent mistakes made in the submissions of the Crown.
One of the matters which the learned Magistrate failed to take into account was the publicity which was given to Interville’s offences. Mr Lancaster asked me to take that into the account on the question of deterrence. Whilst it has some bearing, it seems to me that I must, in accordance with the well-known principles referred to above, give some weight to the need for the factor of general deterrence to be taken into account in determining the appropriate penalty, notwithstanding the deterrent effect of the publicity.
The Magistrate was also asked to take into account the fact that changes had been made in the administration and conduct of Interville’s business. It appears that his Honour had regard to this.
It is also important to bear in mind that Mr Phae is now, and was at the time when the matter came before the Magistrate, the only operating director. The other director, Mr Lee, had resigned from the company, and Mr Phae had implemented measures to prevent a recurrence of the offences. These measures included steps taken to prevent downloads and education of staff members.
Mr Lancaster also asked me to take into account the fact that the company is not a large company, and that whilst the offences are to be dealt with upon the basis that the company is a corporate offender, I should approach the matter upon the basis of the size of the company.
However, this raises a point to which the Crown referred, namely, that in the case of personal offenders, there is a greater range of punishments, which include imprisonment and community service. I therefore have to take this into account in assessing the appropriate penalty.
Mr Lancaster accepted that the offence is a serious one. He submitted that the figure initially contemplated by the Magistrate of $17,000 was an appropriate approach because it starts with the $33,000 maximum figure and applies the relevant discounts. He also submitted that the figure of $500 per additional offence was appropriate. On the other hand, the Crown submitted that the sequence 21 offence should carry a larger penalty and that the other penalties of $2000 for sequences 22 to 40 were within the range and should remain.
In my view, taking into account all of the matters which have been put to me this morning, the approach which I ought to take is that to which Emmett J referred in Kam Lai-Ha. I think this exposes the error in the Magistrate’s reasoning and I would have thought that taking all these matters into account the appropriate penalty ought to be $30,000.
In arriving at that figure, I have determined that the appropriate penalty for sequence 21 should be $20,000 and that the amount for each of sequences 22 to 40 should be $1,000. This would bring the total to $39,000 but I will reduce it to $30,000 because, in my view, to order more than $30,000 in total would “look wrong”.
In coming to this view I have taken into account the fact that Interville has incurred additional legal expenses as a result of the Magistrate’s inadvertent error. I do not think it is necessary to engage in a mathematical exercise for the reasons that I have referred to above.
Accordingly, I propose to allow the appeal and order that the penalty be imposed in lieu of the figure of $80,000 handed down by Magistrate McIntosh on 25 November 2008 is a fine of the amount of $30,000 in respect of sequences 21 to 40.
In doing so I have taken into account the section 16BA offences listed on the Court Attendance Notice, commencing at page 2 of the Appeal Book.
I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. Associate:
Dated: 12 May 2009
Solicitor for the Appellant: Access Business Lawyers Solicitor for the Respondent: Comonwealth Office of the Director of Public Prosecutions
Date of Hearing: 8 May 2009 Date of Judgment: 8 May 2009
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