Aksentijevic v Department of Internal Affairs
[2016] NZHC 226
•22 February 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-129 [2016] NZHC 226
UNDER The District Courts Act 1947 IN THE MATTER
of an appeal to the High Court against the decision of the Manukau District Court
BETWEEN
ZELJKO AKSENTIJEVIC Appellant
AND
DEPARTMENT OF INTERNAL AFFAIRS
Respondent
Hearing: 15 September 2015, further submissions in writing 22
September 2015 and 6 October 2015
Appearances:
Appellant in person
D J Dufty and T M Badland for the RespondentJudgment:
22 February 2016
JUDGMENT OF WOODHOUSE J
This judgment was delivered by me on 22 February 2016 at 12:00 p.m. pursuant to r 11.5 of the High Court Rules 1985.
Registrar/Deputy Registrar
……………………………………
Parties / Solicitors:
Mr Z Aksentijevic, Auckland
Mr D J Dufty, Meredith Connell, Office of the Crown Solicitor, Auckland
Ms T M Badland, Department of Internal Affairs, Wellington
AKSENTIJEVIC v DEPARTMENT OF INTERNAL AFFAIRS [2016] NZHC 226 [22 February 2016]
[1] Mr Zeljko Aksentijevic has appealed against a decision in which he was found to have breached ss 9, 10 and 11 of the Unsolicited Electronic Messages Act
2007 (the Act). He has also appealed against a penalty of $12,000 imposed under s 45.1
Relevant provisions of the Act
Sections 45 and 49
[2] Section 45 of the Act provides that the Court may order a person to pay a pecuniary penalty for commission of what is called “a civil liability event”. The maximum penalty is $200,000. A civil liability event is defined in s 18 as breach of one or more of ss 9(1), 10, 11(1) and two other sections which are not relevant.
[3] Section 49 provides that proceedings by the Department alleging “a civil liability event” and seeking a penalty are civil proceedings. The standard of proof is the civil standard – the balance of probabilities. The other usual rules of Court, rules of evidence and procedure for civil proceedings also apply.
Sections 9, 10 and 11
[4] Section 9 is as follows:
9 Unsolicited commercial electronic messages must not be sent
(1) A person must not send, or cause to be sent, an unsolicited commercial electronic message that has a New Zealand link.
(2) If a recipient uses an unsubscribe facility in accordance with section
11(1)(a), the recipient's consent to receiving a commercial electronic message from the sender is deemed to have been withdrawn with
effect from the day that is 5 working days after the day on which the unsubscribe facility was used.
(3) A person who contends that a recipient consented to receiving a commercial electronic message has the onus of proof in relation to that matter.
[5] Section 10 relevantly provides that a person must not send a commercial
electronic message unless the message “clearly and accurately identifies the person”
1 Department of Internal Affairs v Aksentijevic DC Manukau CIV-2013-092-3012, 23 October
2014 (liability) and 23 December 2014 (penalty) (Judge C S Blackie).
who authorised the sending of the message and other information. The relevant detail is discussed further below.
[6] Section 11 relevantly provides that a person must not send a commercial electronic message unless there is what is described as a “functional unsubscribe facility”. The details of this provision are not relevant because Mr Aksentijevic accepts that there was no functional unsubscribe facility included in the messages in question. He says it was not required.
Section 6: meaning of “commercial electronic message”
[7] “Electronic message” is defined in s 5. Mr Aksentijevic does not dispute that all of the messages in question were electronic messages. A central issue is whether they were commercial electronic messages. A “commercial electronic message” is defined in s 6 as follows:
6 Meaning of commercial electronic message
For the purposes of this Act, commercial electronic message—
(a) means an electronic message that—
(i) markets or promotes—
(A) goods; or (B) services; or (C) land; or
(D) an interest in land; or
(E) a business or investment opportunity; or
(ii) assists or enables a person to obtain dishonestly a financial advantage or gain from another person; or
(iii) provides a link, or directs a recipient, to a message that does
1 or more of the things listed in subparagraphs (i) and (ii);
but
(b) does not include an electronic message that—
(i) provides a quote or estimate for the supply of goods or services if that quote or estimate was requested by the recipient; or
(ii) facilitates, completes, or confirms a commercial transaction that the recipient previously agreed to enter into with the person who authorised the sending of the message; or
(iii) provides warranty information, product recall information, or safety or security information about goods or services used or purchased by the recipient; or
(iv) provides notification of factual information about a subscription, membership, account, loan, or similar relationship involving the ongoing purchase or use by the recipient of goods or services offered by the person who authorised the sending of the message, or the recipients ongoing subscription, membership, account, loan, or similar relationship; or
(v) provides information directly related to an employment relationship or related benefit plan in which the recipient is currently involved, participating, or enrolled; or
(vi) delivers goods or services, including product updates or upgrades, that the recipient is entitled to receive under the terms of a transaction that the recipient has previously entered into with the person who authorised the sending of the message; or
(vii) provides the recipient with information about goods or services offered or supplied by—
(A) a government body; or
(B) a court or tribunal; or
(viii) has any other purpose set out in the regulations.
Section 4: “unsolicited” messages
[8] Whether the messages were unsolicited is another central issue. There are two relevant definitions in s 4, as follows:
unsolicited commercial electronic message means a commercial electronic message that the recipient has not consented to receiving.
consented to receiving—
(a) means—
(i) express consent, whether given by the relevant electronic address-holder or any other person who uses the relevant electronic address; or
(ii) consent that can reasonably be inferred from—
(A) the conduct and the business and other relationships of the persons concerned; and
(B) any other circumstances specified in the regulations; or
(iii) consent that is deemed to have been given when the following circumstances apply:
(A) an electronic address has been conspicuously published by a person in a business or official capacity; and
(B) the publication of the address is not accompanied by a statement to the effect that the relevant electronic address-holder does not want to receive unsolicited electronic messages at that electronic address; and
(C) the message sent to that address is relevant to the business, role, functions, or duties of the person in a business or official capacity; but
(b) does not include the circumstances specified in the regulations from which consent cannot be inferred.2
Purposes of the Act
[9] Section 3 defines the purposes of the Act as follows:
3 Purposes of this Act
The purposes of this Act are to—
(a) prohibit unsolicited commercial electronic messages with a New
Zealand link from being sent, in order to—
(i) promote a safer and more secure environment for the use of information and communications technologies in New Zealand; and
(ii) reduce impediments to the uptake and effective use of information and communications technologies by businesses and the wider community in New Zealand; and
(iii) reduce the costs to businesses and the wider community that arise from unsolicited commercial electronic messages; and
(b) require commercial electronic messages to include accurate information about the person who authorised the sending of the message and a functional unsubscribe facility in order to enable the recipient to instruct the sender that no further messages are to be sent to the recipient; and
2 There is no relevant provision in the Regulations.
(c) prohibit address-harvesting software or a harvested-address list from being used in connection with sending unsolicited commercial electronic messages in contravention of this Act; and
(d) deter people from using information and communications technologies inappropriately.
Background facts
[10] In 2012 the respondent received complaints from various individuals about electronic messages they said they had received. Twenty eight of these messages contained a link to a web page called “Google Play”. This is a website run by Google for people to shop for and download computer applications (apps), including game apps, and other entertainment items. Google Play was described by the respondent’s investigator, Mr Peter Merrigan, as follows:
Google Play has a developer’s console which is open to all Android application developers. Once registered, developers can submit and manage their applications and create a portfolio which in turn becomes available for other users. The applications can then be made available through Google Play for other people to download.
[11] The link on the messages from Mr Aksentijevic went to an advertisement for a game called “CrazyTilt Arcade Challenge”. Mr Aksentijevic was involved in the development of this app. The overview of CrazyTilt included the following description:
MAME and NEO-GEO emulator with online scoreboard, featuring new never before seen input method for mobile devices and new gameplay element for classic arcade games. Many changes to core MAME video and input systems make it faster and smoother than other arcade emulators on the market.
[12] “MAME” is an acronym for “Multiple Arcade Machine Emulator”. As I understand it in general terms, MAME is concerned with development of electronic simulations of computerised arcade games, such as CrazyTilt. These can be played on android smart phones and “emulate” the old arcade games. “NEO-GEO” is an internet forum for people interested in MAME. Mr Aksentijevic had registered with this forum.
[13] In addition to the link to Google Play in the electronic messages from Mr Aksentijevic, some of the emails contained statements of benefits of CrazyTilt. Some also were disparaging of other apps.
[14] Mr Aksentijevic said that he began sending these messages because of an abusive campaign against him conducted through the forum. He says that that arose because he accused some others of selling counterfeit game boards and cartridges, commonly referred to as “bootleg games”. From evidence in the District Court it does appear that Mr Aksentijevic was subject to abusive comment. He also engaged in abuse.
[15] Twenty six of the 28 messages were sent between 20 July and 14 September
2012 and there were two in November 2012. The 28 messages were sent to 439 unique email addresses. Many of the addresses received more than one message. The total of messages sent was 2,230.
[16] One of the original complaints received by the respondent was from a person in the United States. It identified Mr Aksentijevic by name and stated that he lived on the North Shore (i.e. Auckland).
[17] Following investigation by Mr Merrigan, he applied for and obtained a warrant to search Mr Aksentijevic’s home and this was executed. Mr Aksentijevic has raised an issue as to the validity of the warrant.
Section 9: evaluation
[18] Section 9(1) has five elements. Putting them as questions they are: (a) Were the messages in question electronic messages?
(b) Were they sent by Mr Aksentijevic? (c) Did they have a New Zealand link? (d) Were they unsolicited?
(e) Were they commercial electronic messages?
[19] Judge Blackie had no difficulty in concluding that the emails were electronic messages, as they obviously were. This was not in issue on appeal. It also was not in issue that the messages were sent by Mr Aksentijevic and they had a New Zealand link. The issues on appeal under s 9 are whether the Judge was correct in his conclusion that the messages were “commercial electronic messages” and that they were unsolicited. I am satisfied that the Judge was correct and substantially for the reasons he gave. It is nevertheless necessary, and in some respects appropriate, to record my reasons. This is because I am bound to reach my own conclusion on a general appeal, which is what this appeal is. In addition, the only other High Court decision I have been referred to on interpretation did not address the meaning of “commercial electronic message” to any material extent, but this is a central issue on
this appeal.3
Were the electronic messages “commercial electronic messages”?
[20] The respondent’s case was that CrazyTilt was marketed or promoted on the Google website and because of this the emails with the link were commercial electronic messages pursuant to s 6(a)(i) and (iii).
[21] Mr Aksentijevic’s contentions are appropriately set out in his own words,
taken from his notice of appeal, with some minor amendment:
9.The Appellant was not trying to sell or promote anything, he was doing exactly the opposite, that is trying to expose the ongoing scam and prevent further sales of the counterfeit games.
10.The Respondent’s accusation that the Appellant was commercially marketing CrazyTilt-MAME, a free software, is a logical contradiction by itself. “Free” is the opposite of “commercial”.
11. The body of the messages sent by the Appellant were not even mentioning Crazy-Tilt-MAME application. Only the Appellant’s email signature is a link to this free software, for the purpose of identifying himself as a MAME developer, which entails throughout technical understanding of arcade games, so that counterfeit games
3 Chief Executive of the Department of Internal Affairs v Mansfield [2013] NZHC 2064 at [49]
(“Mansfield”). The Judge also addressed the question whether the messages in that case were unsolicited. That question turned largely on questions of fact, rather than statutory interpretation, which is also the case on this appeal.
warnings would be taken seriously by the collectors and other potential buyers.
12.It is unprecedented and erroneous reasoning that a personal email can be labeled [sic] as “commercial” just because the email signature is in a form of a link to a personal web-page. The purpose of a signature is of course identification and personal information, not marketing.
13.The Respondent erred in law by applying “commercial messages” legal tests to “personal messages”. It is not the purpose of the Unsolicited Electronic Messages Act to prevent social interaction, nor is job [sic] or jurisdiction of the Respondent to censor personal emails.
[22] There was a further ground of appeal relating to freedom of expression, which I will deal with separately. Mr Aksentijevic referred to errors by the respondent, but these may be taken to be submissions that the Judge was in error. I do note that Mr Aksentijevic, appearing on his own behalf, presented his submissions competently, including with clarity.
[23] An important part of Mr Aksentijevic’s argument, in its essence, is that the word “commercial” in the expression “commercial electronic message” is determinative, but what he was doing was not commercial.
[24] The word “commercial” could colour the language of the definition, and be part of the context leading to a conclusion that Mr Aksentijevic had to be somehow engaged in trade. But the word “commercial” does not govern meaning. The words “commercial electronic message” are in fact a label, and the meaning of those words has to be determined from the definition.
[25] There are some parts of the definition, in s 6(a), which support Mr Aksentijevic’s interpretation; for example, s 6(a)(i)(E) which refers to marketing or promoting “a business or investment opportunity”, and s 6(a)(ii) which refers to assistance “to obtain dishonestly a financial advantage or gain”. But these words do not bear in any material way on the meaning of the words that apply in this case – “an electronic message that … markets or promotes … goods”.
[26] There is no definition of “market” or “promote”. They are words with reasonably plain meanings. “To market” could be taken to mean “to offer for sale”. But that is an alternative to “promote”. A straightforward meaning of “to promote” is to present something as worthwhile or to extol the virtues of it. CrazyTilt was clearly being promoted, in those terms, on the Google site. If there was any uncertainty in that regard, it would undoubtedly be removed by the content of those of Mr Aksentijevic’s emails which referred to CrazyTilt in direct terms. The description of CrazyTilt on the Google site was earlier recorded. The content of some of the emails was as follows:
(a) At Exhibit 2, page 7 the email provides:
I came there to tell you about my fantastic emulator and amazing new never before seen features.
(b) At Exhibit 2, page 7, the email provides:
MAME is free, do not buy MAME! Don’t buy crappy xxx- in-1 bootlegs@ - Crazy Tilt Arcade Challenge is MAME & NEO-GEO emulator on Android. It has online scoreborad [sic] unlike any other emulator and is featuring new never before seen input method for mobile devices and even some new gameplay elements for classic arcade games. Many changes to core video and input systems make it faster and smoother than any other arcade emulator on the market.
[hyperlink]
(c) At Exhibit 2, page 11, the email provides:
I came to Neo-Geo forums tell you about free emulator and
amazing new never before seen features …
Crazy Tilt Arcade Challenge – FREE DOWNLOAD [hyperlink]
(d) At Exhibit 5, page 37, the email provides:
Stop selling MAME! Stop selling your crappy multi-game boards!
I came to Neo-Geo.com forums tell you about free emulator
and amazing new never before seen features …
Crazy Tilt Arcade Challenge – FREE DOWNLOAD: [hyperlink]
…
(f) At Exhibit 10, page 63, the email provides:
I came to Neo-Geo.com forum to tell people about my
amazing free emulator and never before seen features …
[27] If Parliament had intended that the verb “to market”, or the verb “to promote”, and particularly the latter, had to be directed to a sale, or some other form of exchange for value, the conventional way of making that clear would be to include words to that effect. Alternatively, there could have been an exception in the definition for the marketing or promotion of goods or services available at no charge. Section 6(b) has detailed provisions which would otherwise be, or might otherwise be, included in the ordinary meaning of the words marketing or promoting, but there is no exclusion in respect of goods marketed or promoted at no cost.
[28] “Goods” and “services”, with goods being the most relevant word for this appeal, are defined in s 4 of the Act as having the same meaning as in s 2(1) of the Consumer Guarantees Act 1993. As Judge Blackie noted, as one of his reasons for rejecting Mr Aksentijevic’s argument, the definition of goods in the Consumer Guarantees Act, which defines goods as including computer software, does not stipulate that goods must have a cost to be subject to the Consumer Guarantees Act. It may also be noted that guarantees imposed by the Consumer Guarantees Act in respect of the supply of goods do not require an exchange of value. In that Act, s 2(1) provides that “supply … in relation to goods, means supply … by way of gift, sale, exchange, lease, hire or hire purchase” (emphasis added).
[29] The purpose of the Act supports what amounts to a broad interpretation of the verbs “to market” and “to promote”, rather than the narrower interpretation urged by Mr Aksentijevic. The purpose of the Act is not expressed to be to restrain unsolicited electronic messages designed to sell goods or services, although such are obviously included. The broad purpose of the Act is protective in relation to recipients of messages and organisations transmitting messages, with a further or related objective being to reduce costs to businesses in the wider community. The narrower the definition of what happens to be called “commercial electronic messages”, the less protection there will be in respect of these desired purposes. But some definition was required because of the need to find a balance between the objectives of the Act and competing rights or interests such as freedom of expression.
[30] The need to balance the competing interests was discussed in the explanatory note to the Unsolicited Electronic Messages Bill 2005 (281-1) (the Bill). One option, recorded as having been considered and discarded, was noted and discussed as follows:
To have the legislation apply to all unsolicited electronic messages, rather than just to all unsolicited “commercial” electronic messages. Having the scope that broad would unduly restrict email communication and impose too many compliance costs given that the main problem area is in relation to messages of a marketing or promotional nature.
[31] It is probable that the word “commercial” was incorporated in the defined expression, because that is the expression used in the Australian Spam Act 2003 (Cth)and the Australian Act appears to have been used as a template for the Bill. This is indicated by cross-references to relevant provisions of the Australian Act in the New Zealand Act, including a cross-reference at the end of s 6 of the New Zealand Act to the Australian Act. But the Bill was materially modified in the select committee process.
[32] The material part of the definition of “commercial electronic message” in clause 6 of the Bill was “an electronic message that has, as its primary purpose, … marketing or promoting” goods or services or other things. And the provision now in s 6(a)(iii) of the Act, which includes a link to a promotional or marketing message as coming within the definition, was not in the Bill. The definition in the Bill with reference to the primary purpose of the message, which was narrower in the Australian Act, appears to have been included because the Bill also placed restrictions on what was described as a “promotional electronic message” – one that was not commercial and had as its primary purpose the promotion or marketing of the aims or ideals of an organisation. Provisions in that regard were omitted from the Bill because it was considered they might provide loopholes to those sought to be caught in respect of commercial electronic messages. Commercial electronic messages, as in the Act, could not be sent unless consent had been obtained in advance. The Bill provided that promotional electronic messages could be sent, but with provision for the recipient to “opt out” in the future. The Bill as enacted removed the opt out provision for promotional electronic messages, but at the same time substantially broadened the definition of commercial electronic message,
although leaving the words “commercial” in the name. The Act makes no reference
to purpose and extended the scope with the addition of s 6(a)(iii).
[33] For these reasons I am satisfied that “to market” and “to promote” do not require proof of a commercial or business objective, or an intention to make money, or that a defendant was engaged in trade. And the omission of any reference to purpose means that Mr Aksentijevic’s argument that it was not his purpose or intention to promote or market CrazyTilt would not provide a defence even if the evidence supported his argument of intent, and I am not persuaded that it does.
Did the recipients of the messages consent to receiving them?
[34] I have expressed the next issue by reference to proof of consent, rather than to a question whether the messages were unsolicited, because of the definition of unsolicited and because, under s 9(3), the onus was on Mr Aksentijevic to prove that the recipients had consented to receiving the messages he sent.
[35] What Mr Aksentijevic had to prove, on the balance of probabilities, was one of the three alternatives in the definition of “consented to receiving”. Mr Aksentijevic’s argument, although not put precisely in terms of the definition, may be taken to be that either there was express consent in terms of sub-paragraph (i) of the definition, or consent could reasonably be inferred in terms of sub-paragraph (ii). His submission was that there was consent arising from his joining the NEO-GEO forum. He said that other forum members had an option to indicate on registration whether they were willing to receive emails from other members.
[36] On the appeal Mr Aksentijevic produced a screen shot of the registration page for the forum. This includes provision to record electronically whether the person registering did not wish to receive emails from administrators of the forum or did not wish to receive emails from other members of the forum, or both. For the respondent, Mr Dufty objected to this document being produced in evidence on the appeal on the grounds that it had not been put in evidence in the District Court. That is a proper objection in the circumstances of this case because, if Mr Aksentijevic had sought to put it in evidence, it could have been the subject of challenge and, if admitted in evidence, it could have been the subject of cross-examination of Mr
Aksentijevic and evidence, possibly in rebuttal, from Mr Merrigan, for the respondent. There is nothing to indicate that this screen shot could not have been put in evidence in the District Court. I therefore allow the objection. But this is not determinative against Mr Aksentijevic for the reasons that follow.
[37] What Mr Aksentijevic had to establish was that he had the consent of all of the 439 individual recipients of his emails and their consent in respect of all of the emails they received. There is no proof of consent from any of them.
[38] I also agree with the Judge’s conclusion that consent cannot be inferred from the relationship between the parties, arising out of Mr Aksentijevic’s membership of the forum. Mr Aksentijevic had been banned from the forum. He does not dispute that. He was banned by an administrator. To the extent that consent might have been inferred from registration, that inference could not survive the banning.
[39] Further, Mr Aksentijevic acknowledged in cross-examination that he knew that the recipients did not want to receive the messages. The precise question and answer were as follows:
Q. So you knew they didn’t want to receive the messages?
A. Ah, well of course. If someone steals my car and then complains to Police that I want my car back, I mean of course its, of course they didn’t want my emails and so I didn’t want to, for them to post that publicly.
[40] Mr Aksentijevic was there referring to his allegations against some apparent forum members of bootlegging and other wrongful acts in relation to apps. But the reasons why they did not want to receive the messages are not relevant to the question of consent. The absence of consent may also be inferred from the abusive nature of a number of the messages from Mr Aksentijevic. Even if there was a basis for inferring consent to receive emails discussing MAME – or discussing the topics for which the forum was established – inferred consent would not extend to abusive emails. And the fact that abusive emails from Mr Aksentijevic may have been preceded by abusive emails from others on the forum does not provide a defence to Mr Aksentijevic.
[41] For these reasons I am satisfied that there was no error by the Judge in his conclusion that a breach of s 9(1) had been established.
Section 14 of the New Zealand Bill of Rights Act 1990
[42] Mr Aksentijevic contended that the respondent’s “actions” were in violation of s 14 of the New Zealand Bill of Rights Act. Section 14 provides that everyone has the right to freedom of expression, including the freedom to seek, receive and impart information and opinions of any kind in any form.
[43] The Bill was assessed for consistency with the Bill of Rights Act. Relevant advice to the Attorney-General was as follows:4
2.We have concluded that the Bill appears to be consistent with the Bill of Rights Act. In reaching this conclusion, we considered potential issues of consistency with sections 14, 21, and 25(c) of the Bill of Rights Act.
…
8.The Bill contains a number of provisions that limit the right to freedom of expression. For instance, clause 9 prohibits a person from sending unsolicited commercial electronic messages that have a New Zealand link, or causing such messages to be sent. Similarly, clause 10 prohibits a person from sending promotional electronic messages that have a New Zealand link, or causing such messages to be sent, to any person who has opted out of receiving messages from that sender. We consider that these provisions are justifiable in terms of section 5 of the Bill of Rights Act. They help curb the growth of span in New Zealand and contain various limitations and safeguards to avoid capturing legitimate messages.
[44] I agree with the advice to the Attorney-General. Mr Aksentijevic is not entitled to any relief in respect of the proceedings brought against him based on his contention that there was breach of the Bill of Rights Act. And for the avoidance of doubt, that conclusion extends to the acts taken by the officers of the respondent in issuing and prosecuting the proceeding. There is the separate question in relation to
the search warrant to which I will come.
4 Jeff Orr and Stuart Beresford Legal Advice: Consistency with the New Zealand Bill of Rights Act
1990: Unsolicited Electronic Messages Bill (Crown Law Office, 22 June 2005).
Sections 10 and 11
[45] As noted in the introduction, s 10 requires accurate sender information to be included in messages. The full provision is as follows:
10Commercial electronic messages must include accurate sender information
A person must not send, or cause to be sent, a commercial electronic message that has a New Zealand link unless—
(a) the message clearly and accurately identifies the person who authorised the sending of the message; and
(b) the message includes accurate information about how the recipient can readily contact that person; and
(c) the information referred to in paragraph (b) complies with any conditions specified in the regulations; and
(d) the information referred to in paragraph (b) is reasonably likely to be valid for at least 30 days after the message is sent.
[46] Section 11 is the provision which requires every commercial electronic message to contain a functional unsubscribe facility. It will also assist to set this out in full, to capture the detail. It is as follows:
11 Commercial electronic messages must contain functional unsubscribe facility
(1) A person must not send, or cause to be sent, a commercial electronic message (the “principal message”) that has a New Zealand link unless—
(a) the principal message includes a functional unsubscribe facility that the recipient may use to instruct the person who authorised the sending of the principal message (the “sender”) that no further commercial electronic messages from or authorised by the sender should be sent to the electronic address at which the principal message was received; and
(b) the unsubscribe facility is expressed and presented in a clear and conspicuous manner; and
(c) the unsubscribe facility allows the recipient to respond to the sender using the same method of communication that was used to send the principal message; and
(d) there is no cost to the recipient if the recipient uses the unsubscribe facility; and
(e) the unsubscribe facility is reasonably likely to be functional and valid for at least 30 days after the principal message is sent; and
(f) the unsubscribe facility complies with any conditions specified in the regulations.
[47] Mr Aksentijevic contended on the appeal that his messages did include accurate sender information. He said this was provided through the hyperlink to the Google site.
[48] In respect of s 11 Mr Aksentijevic submitted that an unsubscribe facility was not required because he does not own any business, he is not involved in any kind of commerce, he does not have any customers, and he does not have any subscribers.
[49] The Judge’s conclusions were as follows:
[33] Turning to the alleged breaches of s 10, it is apparent that none of the 2,230 included accurate sender information, the respondent was not clearly identifiable as the person who authorised the sending of the messages and there was no way to contact him. The fact the respondent said people would know it was him as he posted similar messages on the forum, does not satisfy the provisions of s 10, the requirement being accurate identifying information on each message.
[34] With regard to s 11, I am satisfied that the provisions have been breached by the respondent, as none of messages included a functional unscribe [sic] facility that recipients could use to instruct the respondent that they did not want to receive further emails. Whereas the respondent says that he sent a separate email saying that the recipient could unsubscribe by replying to one of his emails, there was no evidence given in support. Even so, s 11 requires an unsubscribed function in each message.
[50] I agree with the Judge’s conclusions and with his reasons for those
conclusions.
[51] On the appeal Mr Aksentijevic did not refer me to evidence which establishes that everything prescribed by s 10 could be obtained by following the link. In any event, that would not comply with s 10. The information specified in s 10 must be contained in the message and in this case the messages were the emails, not what might be obtained if a person followed the link. If Mr Aksentijevic’s argument was accepted it would significantly extend the scope of s 10 beyond what the clear words indicate, and potentially undermine one of the objectives in a material way.
[52] I also reject Mr Aksentijevic’s argument in relation to s 11. It is not sustainable as a matter of interpretation, with the earlier discussion about the meaning of commercial electronic message being applicable in this regard.
Validity of the search warrant
[53] Mr Aksentijevic contended that the search warrant was unlawful. His submission was as follows:
The Respondent’s search warrant was unlawful because it did not satisfy a condition set out in section 6 of the Search and Surveillance Act 2012, namely that suspected offence[s] must be punishable by imprisonment. This constitutes a violation of section 21 of the New Zealand Bill of Rights Act
1990.
[54] Mr Aksentijevic’s submissions included a response to the respondent’s argument that the search warrant was issued under s 51 of the Unsolicited Electronic Messages Act and that s 6 of the Search and Surveillance Act 2012 had no application.
[55] Section 51 of the Act makes provision for an enforcement officer to apply for a search warrant under Sub-part 3 of Part 4 of the Search and Surveillance Act and that the provisions of Part 4 of that Act apply. Mr Aksentijevic contended that, because of the reference in s 51 of the Act to Part 4 of the Search and Surveillance Act, and the particular provisions of s 107 in Part 4 of the Search and Surveillance Act, it was clear that s 6 of the Search and Surveillance Act did apply.
[56] Mr Aksentijevic has misconstrued s 107 and, more broadly, the way in which the Search and Surveillance Act applies to warrants issued under s 51 of the Act. Section 107 in the Search and Surveillance Act prescribes when a search warrant is invalid. Section 107(1)(a) is directed to two types of search warrant: those issued pursuant to s 6 of the Search and Surveillance Act (a general power permitting police officers to apply for search warrants for offences punishable by imprisonment) and those issued pursuant to other enactments. The latter enactments are specified in the schedule to the Search and Surveillance Act, and include s 51 of the Act. Section
51(4) of the Act is the provision determining validity. Section 6 of the Search and
Surveillance Act has no application.
Penalty
[57] At the hearing of the appeal there was some uncertainty as to whether Mr Aksentijevic was appealing against the penalty imposed as well as against the liability finding. The notice of appeal referred to the decision of 23 December 2014 which imposed the penalty, but the remainder of the document was directed to liability. The respondent filed submissions directed only to liability. This is understandable.
[58] Judge Blackie had given Mr Aksentijevic ample opportunity to make submissions, following the liability decision, but Mr Aksentijevic did not file any submissions. The Judge had to impose penalty without any submissions from Mr Aksentijevic, but with reasonably comprehensive written submissions for the respondent. There was also no evidence before the Court as to Mr Aksentijevic’s financial capacity, although the Judge had also given him an opportunity to put this before the Court.
[59] I considered it appropriate to give Mr Aksentijevic an opportunity to make submissions on penalty, particularly as this appears to be the first case of low level breaches of the Act and one at the margins in terms of liability. Mr Aksentijevic did make oral submissions and, following the hearing, filed a declaration of financial means. Comprehensive written submissions were then filed for the respondent.
Statutory provisions
[60] Section 45 of the Act makes provision for penalties for civil liability events, as follows:
45 Pecuniary penalties for civil liability event
(1) On the application of the enforcement department, the Court may order a person (the “perpetrator”) to pay a pecuniary penalty to the Crown, or any other person specified by the Court, if the Court is satisfied that the perpetrator has committed a civil liability event.
(2) Subject to the limits in subsections (3) and (4), the pecuniary penalty that the Court orders the perpetrator to pay must be an amount which the Court considers appropriate taking into account all relevant circumstances, including—
(a) the number of commercial electronic messages sent:
(b) the number of electronic addresses to which a commercial electronic message was sent:
(c) whether or not the perpetrator has committed prior civil liability events.
(3) If the perpetrator is an individual, the Court may order the perpetrator to pay a pecuniary penalty not exceeding $200,000 in respect of the civil liability events that are the subject of the enforcement department's application.
(4) If the perpetrator is an organisation, the Court may order the perpetrator to pay a pecuniary penalty not exceeding $500,000 in respect of the civil liability events that are the subject of the enforcement department's application.
[61] An alternative for the respondent, as the enforcement department in a proceeding under s 45, is the issuing of a civil infringement notice.
The District Court penalty decision
[62] There does not appear to have been a penalty hearing in the District Court. The Judge’s reasons for the penalty therefore took account of the submissions for the respondent only. These are set out at some length in the decision.
[63] The Judge followed the methodology discussed and applied in this Court in Chief Executive of the Department of Internal Affairs v Mansfield.5 This was outlined by Wylie J as follows:
[64] Further, it is appropriate to adopt a modified version of the three-step approach to sentencing in the criminal context discussed by the Court of Appeal in cases such as R v Taueki.6 This methodology has been adopted in the Commerce Act context.7 In broad terms, the courts should arrive at a starting point pecuniary penalty by considering the breach and any aggravating and mitigating factors attaching to it. It should then consider factors personal to the perpetrator, to determine whether a pecuniary penalty higher or lower than the starting point is required. Finally, it should deduct from the starting point penalty any allowance for an admission of liability and/or cooperation offered by a defendant in relation to others who are suspected of having breached the Act.
5 Mansfield, above n 3.
6 R v Taueki [2005] 3 NZLR 372 (CA); R v Clifford [2011] NZCA 360, [2012] 1 NZLR 23 at [60].
7 Commerce Commission v Alstom Holdings SA [2009] NZCCLR 22 (HC) at [14].
[65] The analogy with sentencing cases in the criminal context can only be taken so far. The overriding objective of a civil pecuniary penalty is deterrence, including the deterrence of others who might seek to breach the Act for financial gain.8 Deterrence in achieved by imposing pecuniary penalties that remove the financial gain that was obtained by, or could reasonably have been obtained, from the breach of the Act.9
[64] A similar approach was adopted in three other High Court cases to which I
was referred.10
[65] The Judge noted that there is a shortage of case law to assist in determining the amount of a penalty to be imposed in the District Court. The Judge did not refer to any earlier decisions in the District Court, and I was not referred to any. The Judge was referred to and took account of the four High Court penalty decisions but, as he noted, the facts of this case, in terms of gravity, are not at all comparable with the High Court cases. (These are discussed below.) There was also the failure by Mr Aksentijevic to provide any submissions. As the Judge said, this left him in the position of only being able to assess the merits of the respondent’s submissions without any assistance from Mr Aksentijevic and with no comparative authorities available.
[66] In Mansfield there was a starting point of $100,000 and an end point of
$95,000. By reference to Mansfield the respondent had submitted in the District Court that the starting point for Mr Aksentijevic should be 10% of the starting point in Mansfield; that is to say, a starting point for Mr Aksentijevic of $10,000. The respondent had submitted that that should be increased by $5,000 because of the abusive tone of the emails, the deceptive nature of them, and some other matters.
[67] The Judge referred to these submissions. He noted the respondent’s
acknowledgement that the breaches in this case were “very small scale offending”.
8 Commerce Commission v Alstom Holdings SA, above n 7; Australian Communications & Media
Authority v Atkinson [2009] FCA 1565 at [49].
9 Australian Communications & Media Authority v Mobilegate Ltd, A company incorporated in
Hong Kong (No 4) [2009] FCA 1225, (2009) 180 FCR 467 at [31]-[35].
10 Chief Executive of the Department of Internal Affairs v Atkinson HC Christchurch CIV-2008-
409-2391, 19 December 2008 (penalty imposed on one of three defendants) (“Atkinson #1”) and
27 October 2009 (penalty imposed on the two other defendants) (“Atkinson #2”); Chief
Executive of the Department of Internal Affairs v Image Marketing Group Ltd [2014] NZHC 139
(“Image Marketing”).
He referred to the total of 2,230 unsolicited commercial emails and 439 unique email addresses. These are the first two factors noted in s 45(2).
[68] The Judge further noted that Mr Aksentijevic had not committed any prior civil liability event, being the third matter specified in s 45(2). But he then said:
[29] … However, this factor and the further factor that he did not gain financially from the unsolicited commercial emails does not mean that a pecuniary penalty should not be imposed. As was made clear by Wylie J in Mansfield deterrence is the over-riding objective in imposing a civil penalty. The purposes of s 3 of the Act must be taken seriously and, therefore, penalties should be seen to have some “bite”, otherwise they might be seen as an inconvenient commercial expense.
[69] On the basis of those considerations the Judge said that he accepted the respondent’s submission that an appropriate starting point was a penalty of $10,000. He then discussed aggravating and mitigating factors (the absence of previous breaches being included in the starting point) as follows:
[30] … I must bear in mind that the main purpose of a pecuniary penalty being imposed on the respondent is to serve as a deterrent to him and to others against engaging in such conduct. It is, however, comparatively low level offending and while there are aggravating features, none of them are [sic] severe or extreme. I include in the starting point the argument presented by the applicant that following the warrants being executed, the respondent was put on notice of the existence and the function of the Act and also his actions subsequent to the warrant and his interview amounting to a disregard of the law, albeit not a blatant disregard. I must bear in mind that the respondent defended the case in the belief that he had done nothing wrong. Although his defence was ultimately unsuccessful, it must not be seen as an aggravating factor on its own account. I do, however, agree with one aggravating factor and that is the abusive nature of a number of the communications.
Having regard to those considerations the Judge increased the starting point by
$2,000, to $12,000.
[70] He discussed factors personal to Mr Aksentijevic which might justify an increase or a decrease as follows:
[33] The applicant accepts that there are no factors personal to the respondent that would justify any further increase in the penalty. However, on the other hand, the respondent has failed to provide any submission as to the penalty he believes should be imposed and has failed to provide any statement of means, despite being provided with the opportunity to do so.
As a result, I can see no justification for decreasing the penalty. This may be detrimental to the respondent but given his lack of assistance and apparent unwillingness to participate in the current process, lends support to the view that if it is detrimental, that is a burden he must carry.
[71] The result was no further adjustment to increase the starting point to $12,000.
[72] There was also an order that Mr Aksentijevic pay costs assessed under the
District Court Rules on a 2B basis, together with disbursements.
Discussion
[73] In the discussion that follows I have taken account of the oral submissions from Mr Aksentijevic, and the comprehensive written submissions for the respondent.
[74] The appeal against the penalty, as with the appeal against liability, is a general appeal against a decision in what is expressly defined in the Act as a civil proceeding.11 Notwithstanding the adoption of a modified Taueki methodology for assessment of penalty, I consider that the appeal against the penalty requires this Court to approach the matter in the same way that any other general appeal in a civil proceeding would be approached. It is not a question of determining whether the penalty imposed in this case was manifestly excessive. Section 45(1), which provides that the court “may” impose a penalty, gives the original court a discretion. An appeal in a civil proceeding against exercise of a discretion should only be
allowed if there has been an error of principle, relevant considerations were not taken into account, irrelevant considerations were taken into account, or the decision is plainly wrong.12 I approach this appeal on that basis, but with one added consideration of some consequence. This is that on this appeal, and for the reasons earlier recorded, I did receive submissions from Mr Aksentijevic and I did receive his statement of financial means. Taking these factors into account has been part of my reasons for coming to a different conclusion from the Judge on the amount of the penalty. But this does not indicate error by the Judge; Mr Aksentijevic was
responsible for the absence of this information.
11 Section 49 of the Act, noted above at [3].
12 May v May (1982) 1 NZFLR 165 (CA).
[75] In relation to the “gravity” of the breach – or its seriousness in terms of civil proceedings – the first enquiry would seem most appropriately to be as to the number of messages sent and the number of addresses to which those messages were sent. These are mandatory considerations in s 45(2) and these were the first matters considered by the Judge. Here, as earlier noted, there were 2,230 unsolicited emails and 439 unique email addresses. The Judge described the 439 number as “comparatively insignificant when compared with the tens of thousands in the other cases”, being reference to the four High Court penalty decisions. In my judgment the numbers in this case are trifling when compared with the numbers in the other cases. The numbers are trifling both on a comparative basis and by taking judicial notice of the number of messages that can be sent, and the number of recipients that can be targeted, electronically. In the explanatory note to the Unsolicited Electronic Messages Bill, in the opening paragraph of a discussion of the nature and magnitude of the problem from spamming and the need for Government action, it is stated:
According to New Zealand internet service providers … and anti-spam solution companies, spam accounts for about 40% to 75% of all email traffic (estimated at over 350 million messages per month).
[76] The bare numbers from the High Court penalty decisions, the “starting points”, and some other factors, are as follows:
(a) Mansfield: The Judge said: The messages were “in the hundreds of thousands. It could have been close to a million.” The total number of addresses “was somewhere between 66,722 and 80,705”. The starting point was $100,000. The starting point took account of the absence of any prior breach and one aggravating factor – deliberate action with knowledge of the prohibitions – which has no application in this case.
(b)Atkinson #1: 2,006,632 electronic messages were sent. There was breach of ss 9, 10 and 11. The defendant took a margin on commission payments, with the total commissions being in the order of $1.6 million. The starting point was the maximum of $200,000. The final penalty was $100,000. This was a penalty agreed by the parties subject to approval of the Court. The reduction was because
the activity began when it was not illegal to send unsolicited electronic messages, and the defendant co-operated and was candid about what he did at an early stage and provided an undertaking.
(c) Atkinson #2: This decision imposed penalties on two co-defendants of the defendant dealt with in Atkinson #1. The primary facts were the same – the number of messages and commission payments. The starting points were the same. The end point for one defendant was
$100,000 based on the same mitigating factors as in the first case. The end point for the other defendant was $50,000. The Judge noted that it was accepted that the level of culpability of this defendant was not as high as the other two and that there was “an issue about ability to pay”. These two defendants admitted liability having continued to defend the proceeding for, it seems, some nine months or so after the penalty was imposed in Atkinson #1.
(d)Image Marketing: 45,000 text messages were sent in breach of s 9 over approximately one month. In the same year 519,000 emails were sent, but the number of recipients is not noted. The following year further emails were sent. The decision records that the precise number of recipients of those messages was unknown and there is no reference to the number of emails. The defendant also sold a database containing 50,000 email addresses in breach of s 15 of the Act. There was little available information of profit to the company. The parties had agreed a starting point of $160,000 subject to Court approval. The Judge considered that was within the proper range, although at the lower end of the range. There was a reduction of 25% for the defendant’s co-operation and acknowledgement of liability. The Judge said this avoided very substantial costs to the taxpayer for a hearing estimated to take seven days. The Judge did not refer to the fact that there could have been an order for costs against the defendant pursuant to the provisions for costs in the High Court Rules, which include indemnity costs in appropriate cases.
[77] In this case the Judge accepted the respondent’s approach of establishing a starting point simply by calculating a percentage of the starting point in Mansfield. With respect, I do not consider that that is an appropriate approach; certainly not one which should fix the starting point without having regard to other factors. The Judge’s considerations were not confined to this percentage, but it was the dominant factor. One of the problems with this approach, in my judgment, is that the maximum fine is $200,000 irrespective of the number of messages sent, irrespective of the number of addresses to which the messages were sent and irrespective of the number of breaches. This is because s 45(3) for individuals not only fixes a maximum penalty of $200,000 but does so “in respect of the civil liability events that are the subject of the enforcement” proceeding. It is plural events. Messages numbering in the millions could be sent, and possibly with recipients numbering in the hundreds of thousands and possibly millions. There is need to look at the numbers in each case in absolute terms as well as in comparison with other cases. As I have already said, I consider that the numbers in this case are trifling and they come close to insignificance compared with the few decisions that have come before this Court, let alone compared with what might happen. And if percentages are used, they might more appropriately be used on the comparative figures for the number of messages sent and the number of addresses to which they were sent, rather than as a percentage of a penalty in another case. In Mansfield the Judge said the messages “could have been close to a million”. Assuming there were 900,000, the number of messages sent by Mr Aksentijevic is 0.25% of that number. Approximately 900,000 messages produced a starting point of $100,000. 0.25% of that is $250. The electronic addresses in Mr Aksentijevic’s case (439) represent 0.59% of the electronic messages in the Mansfield case (73,713).
[78] I am not suggesting that fine arithmetical calculations of this nature are the sole determinant, or should necessarily be engaged in at all, but it indicates, in my judgment, that on a comparative basis a starting point of $10,000 for Mr Aksentijevic was far too high.
[79] There are further considerations, some of which might more appropriately be taken into account as aggravating or mitigating factors after fixing a starting point, but I do not consider it necessary to make fine distinctions in that regard as if it was sentencing for a crime.
[80] I have concluded that the question whether the messages were commercial electronic messages does not turn on the intention or motivation of the defendant. The fact that the defendant was not seeking to make a profit, and did not make a profit, does not bear on liability. But it does bear on penalty, as the Judge said, and there is no evidence that Mr Aksentijevic sought to make money. That reduces the gravity of the offending substantially, or it comes in as a significant mitigating circumstance. But there is another aspect of intention or purpose which substantially reduces the gravity of these breaches. The evidence goes no further than establishing that Mr Aksentijevic was having an argument, albeit a somewhat vituperative one, with a small number of people, all involved in the forum, as to whether some software was legitimate or bogus, and whether some of the software was better than other software. I am in no doubt that an argument of this nature, amongst a very small group of people sharing a common interest, is a very long way removed from the sort of activity that this legislation is primarily directed to.
[81] There is an alternative to proceeding under s 45 available to the respondent as the enforcement department. This is the issuing of a civil infringement notice. This could be used for lower level breaches and for this reason the infringement notice procedure and regulations as to penalty are in my judgment relevant to the assessment of a penalty in this case. Section 24 provides that, if an enforcement officer has reasonable grounds to believe that a person has committed one or more civil liability events, the enforcement officer may issue a civil infringement notice. Further sections make provision for the issue of the notice and its content, including a requirement to specify the penalties to be paid for each civil liability event alleged to have occurred. This amount must not exceed the amount specified in the regulations. Regulation 7 of the Unsolicited Electronic Messages Regulations 2007 is as follows:
Maximum amount of penalty for civil liability event
The maximum penalty that may be required under a civil infringement notice for each civil liability event alleged to have occurred is—
(a) $200 per civil liability event for an individual; and
(b) $500 per civil liability event for an organisation.
[82] These low levels of maximum penalty under this procedure give support to my general conclusion that a starting point of $10,000 was far too high. On the assumption that infringement notices were issued to Mr Aksentijevic for 28 civil liability events, the maximum penalty would have been $5,600. I emphasise that that is the maximum for an individual. I recognise that, at least theoretically, civil infringement notices might have been issued for 28 infringements of each of s 9, s 10 and s 11, so that the arithmetic might be different if duplicate “charges” were appropriate.
[83] The Judge referred to the observations in the Mansfield case that the overriding objective of a civil pecuniary penalty is deterrence, including deterring those seeking financial gain and imposing penalties which remove the gain.13 The principle is well established, and derived from cases involving penalties under the Commerce Act 1986, and the Australian equivalent. But those considerations have no real application in this case.
[84] The respondent had submitted to the Judge that the penalty should reflect one of the purposes of the Act – to reduce the costs to businesses and the wider community that arise from unsolicited commercial electronic messages (s 3(a)(iii)). There is no evidence of any financial cost to any of the recipients. There is evidence of annoyance, which the respondent referred to in its District Court submissions, but that consideration in my judgment is not what this provision of the Act is primarily concerned with. I also consider that the abusive nature of the emails from Mr Aksentijevic do not warrant any “uplift” of the starting point. It is clear enough that this was directed to a very small number who, to an extent, responded in kind. There is also an aspect of this which indicates how far removed the objective and content
of these emails was in real terms from the sorts of emails the Act is primarily
13 Mansfield, above n 3 at [65]. Cited above at [63].
concerned with: abuse of a potential purchaser is not what is usually encountered when someone is trying to promote or market goods or services.
[85] Some other matters may simply be noted. Sending the message after being interviewed by the departmental officers is of no material consequence because it went only to 19 people. Mr Aksentijevic did not dispute that he sent the messages. He had not previously breached the Act. He did not consider that he was sending commercial messages, and that is understandable, albeit a mistake of law given my conclusion. He has been ordered to pay costs.
[86] The remaining consideration is his ability to pay. This is not a mandatory consideration, as it is under the Sentencing Act 2002, but it is relevant, as the Judge recognised. The Judge got no help from Mr Aksentijevic. The declaration that was filed in this Court by Mr Aksentijevic records that he is an unemployed computer programmer, that he has income of $420 per week from property rentals, and outgoings of $415. On the basis of the declaration there is no realistic prospect of paying a fine from income. Mr Aksentijevic has declared assets of $281,000 and a debt of $5,542, but the principal asset is a house, and I assume from other information that this is the house from which Mr Aksentijevic gets the rental income. Mr Aksentijevic also has the costs liability.
Conclusion on liability
[87] Leaving aside the fact that this was in the nature of a test case and Mr Aksentijevic’s limited means, I consider that the maximum penalty would not be more than $1,000 taking account of all other matters. Because this did amount to a test case, on liability and on penalty at this very low level of offending, and because of the indication of modest financial means, the penalty should be $250.
Result
[88] The appeal against the liability decision is dismissed.
[89] The appeal against the penalty is allowed. The penalty imposed in the
District Court is set aside. A penalty of $250 is substituted.
[90] The District Court costs order stands. There is no order for costs on the
appeal.
Woodhouse J
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