Appellant. THE QUEEN Respondent. 27 February 2014 (further submissions received 13 March 2014)

Transcription

1 IN THE COURT OF APPEAL OF NEW ZEALAND CA518/2013 [2014] NZCA 329 BETWEEN AND JONATHAN DIXON Appellant THE QUEEN Respondent Hearing: Court: Counsel: Judgment: 27 February 2014 (further submissions received 13 March 2014) Harrison, Wild and French JJ D J More and A J More for Appellant S B Edwards for Respondent 17 July 2014 at am JUDGMENT OF THE COURT A The conviction is quashed and replaced with a conviction under s 249(1)(a) of the Crimes Act 1961 on the following terms: That Jonathan Dixon on the 13th day of September 2011 at Queenstown accessed a computer system and thereby dishonestly and without claim of right obtained a benefit. B The appeal against sentence is dismissed. Mr Dixon must report to the Community Probation Service by am on 21 July 2014 to resume his community work sentence. The sentence of community detention will also resume on 21 July REASONS OF THE COURT (Given by French J) DIXON v R CA518/2013 [2014] NZCA 329 [17 July 2014]

2 Introduction [1] Following trial, a District Court jury found Mr Dixon guilty of accessing a computer system for a dishonest purpose contrary to s 249(1)(a) of the Crimes Act He was convicted and sentenced by Judge Phillips to four months community detention and 300 hours community work. 1 [2] Mr Dixon now appeals both his conviction and his sentence. [3] The key issues raised by the appeal are: (a) Does digital footage fall within the statutory definition of property contained in s 2 of the Crimes Act? (b) If digital footage does not fall within the statutory definition of property, should Mr Dixon s conviction for obtaining property under s 249(1)(a) be quashed and replaced with a conviction for obtaining a benefit? (c) Did the Judge overstate the seriousness of the offending and as a result impose a sentence that was manifestly excessive? Factual background [4] Mr Dixon was employed by a Queenstown security firm as a bouncer. One of the firm s clients was Base Ltd, which operates Altitude Bar in Queenstown. Base had installed a closed circuit television (CCTV) in the bar. [5] In September 2011, the English rugby team was touring New Zealand as part of the Rugby World Cup. The captain of the team was Mr Tindall. Mr Tindall had recently married the Queen s granddaughter. On 11 September, Mr Tindall and several other team members visited Altitude Bar. During the evening there was an incident involving Mr Tindall and a female patron, which was recorded on Base s CCTV. 1 R v Dixon DC Invercargill CRI , 2 August 2013.

3 [6] Mr Dixon found out about the existence of the footage of Mr Tindall and asked one of Base s receptionists to download it onto the computer she used at work. She agreed, being under the impression that Mr Dixon required it for legitimate work purposes. The receptionist located the footage and saved it onto her desktop computer in the reception area. Mr Dixon subsequently accessed that computer, located the relevant file and transferred it onto a USB stick belonging to him. [7] Mr Dixon attempted to sell the footage but when that proved unsuccessful he posted it on a video-sharing site, resulting in a storm of publicity both in New Zealand and in the United Kingdom. Judge Phillips found that Mr Dixon had done this out of spite and to ensure that no one else would have the opportunity to make any money from the footage. 2 [8] Base complained to the police about Mr Dixon s actions and Mr Dixon was charged under s 249(1)(a) of the Crimes Act. Is digital footage stored on a computer property as defined in the Crimes Act? [9] Section 249(1)(a) states: 249 Accessing computer system for dishonest purpose (1) Every one is liable to imprisonment for a term not exceeding 7 years who, directly or indirectly, accesses any computer system and thereby, dishonestly or by deception, and without claim of right, (a) obtains any property, privilege, service, pecuniary advantage, benefit, or valuable consideration; or... [10] The indictment against Mr Dixon alleged that he had accessed a computer system and thereby dishonestly and without claim of right obtained property. [11] At the conclusion of the Crown case at trial, Mr Dixon s counsel applied for a discharge under s 347 of the Crimes Act. Counsel argued that the prosecution could 2 R v Dixon, above n 1, at [11].

4 not prove Mr Dixon had obtained property because the footage he had copied and transferred was not property as defined under the Crimes Act. [12] Judge Phillips rejected that submission. 3 He held that the footage was property and directed the jury accordingly. [13] On appeal, Mr More submitted that this ruling and the consequent jury direction were wrong in law and that the conviction should be set aside. This was the sole ground of the appeal against conviction raised by Mr More. Statutory definition [14] The offence created by s 249(1)(a) was inserted into the Crimes Act by the Crimes Amendment Act It was one of a number of provisions designed to modernise the Crimes Act by taking account of computer-related crime and by updating traditional property offences in light of technological advances and developments in case law. 4 In addition to creating new computer-related offences, the Amendment Act also modified the key terms underlying property offences, including the words property and document. 5 [15] The term property is now defined in s 2 of the Crimes Act as follows: property includes real and personal property, and any estate or interest in any real or personal property, money, electricity, and any debt, and any thing in action, and any other right or interest [16] The words money, electricity were added by the Amendment Act. It is unclear whether they were included out of caution or whether they were considered to be outside the previous definition R v Dixon DC Invercargill CRI , 17 April Of particular concern was the yawning gap in the criminal law that had been exposed by this Court in R v Wilkinson [1999] 1 NZLR 403 (CA). The Court held that credit extended by a bank was not capable of being stolen because the definition of things capable of being stolen was limited to moveable, tangible things. The Crown sought to rely in this case on the fact the definition of document was extended to include electronic files. However, the word document does not appear in the definition of property and in our view is not relevant for present purposes.

5 [17] Originally, the Amendment Bill had included a separate definition of property specifically for the new computer-related crimes. The definition was in cl 19 of the original Bill, and was as follows: Property includes real and personal property, and all things, animate or inanimate, in which any person has any interest or over which any person has any claim; and also includes money, things in action, and electricity. That definition was discarded by the Select Committee, which rejected the notion of having different definitions of property for different offences. [18] This case appears to be the first time the courts have been asked to consider the definition of property under s 2 in the context of electronically-stored footage or images. There is a High Court decision holding that internet usage (the consumption of megabytes in the transmission of electronic data) is property. 6 However the Judge in that case expressly distinguished internet usage from the information contained in the data, and was not required to consider the status of the latter. 7 District Court decision [19] In holding that the footage fell within the definition of property, Judge Phillips had this to say: 8 [13] the definition of property in the Crimes Act is wide; in my view clearly is sufficiently wide to cover here the situation. I have regard to the overall position relating to what we are talking about here. I see that what a computer does is receives, digests and analyses data. I consider that data can include anything that is capable of being stored on a computer system, being a word document or a programme file or script, that enables the operator to do something quickly for example and can clearly include picture files and the like. [14] What the receptionist did, under the instructions of the accused on the evidence, was retrieve data from a CCTV camera and store it on the desktop. At that point in time, of course, nothing at all had happened other than there had been the creation of a separate file, being a picture file containing this video. At that point in time the property remained in the possession of Base. The accused arrives, then physically himself moves that picture file from the desktop onto his USB stick and then deletes the picture file. I refer back to the definition of property. In my view we have in fact clear property, being the picture file, which is data from a computer taken Davies v Police [2008] 1 NZLR 638 (HC). The information was not the subject of the charge. R v Dixon, above n 3.

6 into the possession of the accused on the Crown s case. Quite clearly the management/owners/directors or whatever of Base would be able to say that they had that document (the picture file) under the company s control and thus could make a claim to possession of it. It was taken from the desktop, onto the USB stick and the company s document was then deleted. [20] It seems the Judge was influenced by the breadth of the statutory definition, its inclusion of intangible things and the fact that the footage appeared to have all the normal attributes of personal property. It had a value and was capable of being sold. Although the Judge did not expressly address the issue, he must presumably have considered that it did not matter that at all times Base retained its footage. It never lost the images. What it lost was the right to exclusive possession and control of them. [21] The Judge s view is understandable and we venture to suggest is likely to be shared by many. It reflects an intuitive response that in the modern computer age digital data must be property. [22] However, the legal position is not quite so straightforward. After close analysis, we have come to the view that the Judge s decision is fraught with insuperable legal difficulties and is wrong. Our conclusion is that digital files are not property within the meaning of s 2 and therefore Mr Dixon did not obtain property. For reasons we shall explain, we further conclude that the problems have arisen in this case because Mr Dixon was charged under the wrong part of s 249(1)(a). He should have been charged not with obtaining property but with obtaining a benefit. Analysis [23] In his submissions Mr More relied on the English case of Oxford v Moss. 9 In that case, a university student was charged with theft in circumstances where he had unlawfully acquired an examination paper, read its contents and then returned it. The Court held that the student could not be guilty of theft. What he had obtained was the information contained on the paper. The information was confidential but it was not property, unlike the physical piece of paper on which it was written. To put 9 Oxford v Moss (1979) 68 Cr App R 183.

7 it another way, the Court considered that information, even confidential information, was not something capable of being owned in law. [24] While Oxford v Moss was a theft case, it turned on concepts of property and has obvious similarities to the present case. Mr More argued that application of Oxford v Moss here would necessarily lead us to the conclusion that Mr Dixon did not obtain any property. [25] Oxford v Moss was not a closely reasoned decision. However, it remains good law in England and has been followed elsewhere, notably by the Supreme Court of Canada. 10 [26] In this country, Oxford v Moss has been cited in two decisions. One is a decision of the High Court, Money Managers Ltd v Foxbridge Trading Ltd, where Hammond J noted that traditionally the common law has refused to regard information as property, a view he favoured. 11 The second is a decision of the Taxation Review Authority. 12 The Authority was required to determine, among other things, whether computer programs and software constituted goods for the purpose of the Goods and Services Tax Act Judge Barber drew a distinction between the physical items on which the information was stored (such as computer discs) and the information itself. He held, following a number of authorities including Oxford v Moss, that there was no property in the information. [27] Oxford v Moss is also consistent with the general approach taken at common law. The prevailing view is that at least for the purposes of the civil law, confidential information is not property. The House of Lords so held in the context of a trust case, 13 as did this Court and the High Court of Australia when examining the doctrinal basis for the action for breach of confidence Stewart v R [1988] 1 SCR 963. Money Managers Ltd v Foxbridge Trading Ltd HC Hamilton CP67/93, 15 December Taxation Review Authority 25 [1997] TRNZ 129. Boardman v Phipps [1967] 2 AC 46 (HL). Hunt v A [2007] NZCA 332, [2008] 1 NZLR 368; and Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22. Compare, however, the United States cases: for example, Carpenter v United States 484 US 19 (1987); People v Kwok 63 Cal App (4th) 1236 (1998); and People v Kozlowski 96 Cal App (4th) 853 (2002).

8 [28] The issue of whether confidential information is property was also the subject of extensive discussion by the Federal Court of Australia in TS & B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3). 15 Justice Finkelstein stated: 16 Confidential information is not property in any normal sense : Boardman v Phipps [1967] 2 AC 46, 128. Indeed it is not property at all. Confidential information is protected by equity by the notion of an obligation of conscience arising from the circumstances in or through which the information was communicated or obtained : Moorgate Tobacco Co Limited v Philip Morris Limited (No 2) (1984) 156 CLR 414, 438. A court of equity will protect information only if it is truly confidential and the confidence is worth preserving. [29] We are satisfied that the orthodox position is that confidential information (or indeed information in general) is not property, as was held in Oxford v Moss. As stated by Finkelstein J, the traditional approach has been to rely on the equitable cause of action for breach of confidence to provide sufficient protection. [30] We have considered whether digital footage may be distinguishable from confidential information. As noted above, there is a distinction in the case law between confidential information itself and any medium on which it is contained. For example, a computer disc containing information is property but the information itself is not. It seems possible, therefore, that digital footage itself may be property while the information it contains is not. A digital file arguably does have a physical existence in a way that information (in non-physical form) does not. 17 [31] After careful consideration, however, we have reached the view that electronic footage stored on a computer is indistinguishable in principle from pure information. It is problematic to treat computer data as being analogous to information recorded in physical form. A computer file is essentially just a stored sequence of bytes that is available to a computer program or operating system. Those bytes cannot meaningfully be distinguished from pure information. A Microsoft Word document, for example, may appear to us to be the same as a physical sheet of paper containing text, but in fact is simply a stored sequence of TS & B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) [2007] FCA 151. At [74]. See R v Cox (2004) 21 CRNZ 1 (CA) at [49].

9 bytes used by the Microsoft Word software to present the image that appears on the monitor. [32] Accordingly, we consider that if confidential information is not property digital footage also cannot be. [33] That leaves the question of whether we should depart from the orthodoxy that confidential information cannot be property. It is true that the confidential information cases have attracted some criticism. 18 In particular, the distinction drawn between the information itself (not property) and the medium on which it is contained (property) has been said to be illogical and unprincipled. 19 [34] However, the courts have essentially taken the view that any illogicality is outweighed by the strong policy reasons that militate against recognition of information (whether confidential or otherwise) as property. The concern is that if the law were to recognise confidential information as property and so afford it the full protection of property law, that would be likely to have a damaging effect on the free flow of information and freedom of speech. [35] We accept that legal concepts of property are constantly evolving to reflect societal changes and new developments. We acknowledge too that at the same time as it created new computer-related offences (including the one with which Mr Dixon was charged), the New Zealand Parliament amended the definition of property. However, as noted above, the amendment was limited. It consisted only of the addition of money and electricity. Parliament must be taken to be aware of the large body of authority regarding the status of information and in our view had it intended to change the legal position, it would have expressly said so by including a specific reference to computer-stored data See, for example, Dennis J Baker Glanville Williams: Textbook of Criminal Law (3rd ed, Sweet & Maxwell, 2012) at See, for example, JC Smith Theft: Oxford v Moss [1979] Crim LR 119 at 120. It is worth noting, however, that the distinction is an inevitable consequence of the finding that confidential information itself cannot be property. We note here that the Law Commission s 1999 report Computer Misuse, which led to the Crimes Amendment Act 2003, expressly refers to the possibility of redefinition of information as a property right : Law Commission Computer Misuse (NZLC R54, 1999) at [36] (emphasis added). Parliament presumably decided not to enact such a change.

10 [36] In light of the absence of any specific reference to digital files in the statutory definition, the significant body of case law (which, as mentioned, includes decisions at the highest level in other Commonwealth jurisdictions) and the important policy factors underlying those decisions, we consider that this Court should not depart from the orthodox approach. We therefore hold that information, including digital data (whether confidential or not), is not property for the purposes of s 2 of the Crimes Act. 21 [37] We are reinforced in that conclusion by the existence of s 230 of the Crimes Act. Section 230 specifically criminalises the taking, obtaining or copying of trade secrets. If confidential information were property within the meaning of s 2, then s 230 would be unnecessary. [38] We have considered whether in creating a crime of accessing a computer in order to obtain property, Parliament should be taken to have intended that digital files must be property. To put it another way, is it still possible to access a computer and obtain property if digital files do not qualify as property? What other types of property could be obtained? In our view, excluding digital files as property does not render the provision meaningless. We consider that the offence is aimed at situations such as where a defendant accesses a computer and uses, for example, credit card details to unlawfully obtain goods. [39] Finally, it is important to note that our conclusion does not in any way frustrate Parliament s decision to criminalise the misuse of computers. As Mr More acknowledged, at least in his written submissions, Mr Dixon was simply charged under the wrong part of s 249(1)(a). Instead of being charged with obtaining property, he should have been charged with obtaining a benefit, the benefit being the opportunity to sell the footage. 21 We note that this is contrary to the position in Bruce Robertson (ed) Adams on Criminal Law (online looseleaf ed, Brookers) at [CA ]. However, the learned authors of that text do not discuss the relevant case law.

11 Substituted verdict? [40] The Crown submitted that if we were to find the footage was outside the definition of property, that did not mean the appeal against conviction should be allowed. It was submitted that instead we should invoke our powers under s 386(2) of the Crimes Act and convict Mr Dixon of accessing a computer system to obtain a benefit. 22 [41] Mr More was opposed to that course of action. He contended that had Judge Phillips ruled the footage was not property, the prosecution would have been obliged to apply to amend the indictment after its case had closed. Mr More (who was not trial counsel) suggested that Mr Dixon may well have successfully opposed that application and sought a new trial on the grounds that his cross-examination of the prosecution witnesses would have been different had he known he was facing a different charge. Mr More further submitted that the jury were directed on the basis that the footage was property and were never directed to consider the issue of benefit. [42] In Mr More s submission, the appropriate course of action is for us to allow the appeal, quash the conviction and order a new trial. [43] We disagree. [44] Section 386(2) states: (2) Where an appellant has been convicted of an offence and the jury could on the indictment have found him guilty of some other offence, and on the finding of the jury it appears to the Court of Appeal or Supreme Court that the jury must have been satisfied of facts which proved him guilty of that other offence, the Court may, instead of allowing or dismissing the appeal, substitute for the verdict found by the jury a verdict of guilty of that other offence, and pass such sentence in substitution for the sentence passed as may be warranted in law for that other offence, not being a sentence of greater severity. 22 The Crown also sought to invoke s 335(1) of the Crimes Act 1961, but while s 355(1) empowers this Court to amend an indictment on appeal, it does not permit the Court to enter a conviction on a substituted count: see R v Morland CA148/99, 6 September 1999.

12 [45] Under s 386(2), this Court may only substitute a conviction where the substituted offence is one that was open on the indictment. The central issue is whether the Court can be certain that the jury were satisfied as to the elements of the offence sought to be substituted. [46] The power under s 386(2) is to be exercised sparingly. However, in this case we are confident that the jury were satisfied as to the elements of the substituted offence proposed by the Crown. Mr Dixon never disputed that he obtained the footage. The footage, although not property, is something of value that is capable of being sold. While Mr Dixon ultimately did not sell the footage (whether because he chose not to or because negotiations fell through), he certainly had the opportunity to do so. Mr Dixon clearly obtained a benefit as envisaged by s 249(1)(a). [47] In our view, in those circumstances, this is an entirely appropriate case for the Court to exercise its powers under s 386(2). [48] In coming to this conclusion, we have not overlooked that the wording of s 386(2) refers to substitution of the offence charged with some other offence. Strictly speaking, the proposed substitution in this case is of the same offence under s 249(1)(a) and not another offence. However, it would be an absurd result if this were to prevent the Court from exercising its power under s 386(2). Substituting a different form of the same offence is obviously a less radical departure from the original indictment than substituting an entirely different offence. We are satisfied that the greater must include the lesser and that the phrase other offence includes a different form of the same offence. [49] We therefore quash Mr Dixon s conviction and replace it with a conviction under s 249(1)(a) of the Crimes Act on the following terms: That Jonathan Dixon on the 13th day of September 2011 at Queenstown accessed a computer system and thereby dishonestly and without claim of right obtained a benefit.

13 Appeal against sentence [50] In sentencing Mr Dixon, the Judge identified the aggravating factors of the offending as being: the harm and damage caused by Mr Dixon s greed ; the abuse of trust, which the Judge said he considered to be major; the vulnerability of Mr Tindall and his family; and the fact the offending was premeditated. 23 Relying on those factors and the decision of R v Hayes, the Judge said he considered the appropriate starting point to be 12 months imprisonment. 24 [51] The Judge then went on to say that although his sentence had to be a strong one, providing for denunciation and accountability, he was persuaded to step back from a custodial sentence principally on account of the fact Mr Dixon had no relevant previous convictions. 25 [52] The Judge then sentenced Mr Dixon to four months community detention and 300 hours community work. [53] In Mr More s submission the Judge, perhaps overwhelmed by all the publicity, grossly overstated the seriousness of the offending, the breach of trust and the impact on the victims. Mr More contended that unlike the defendant in Hayes, Mr Dixon did not hack into a computer or act fraudulently. Further, the evidence established that Mr Dixon had permission to access Base s computer for the purposes of his job and that Base itself did sometimes download CCTV footage of people in the bar not for security reasons but for the amusement of staff. Base did not lose the footage and indeed had tried to benefit from the notoriety Mr Dixon s actions had given the bar by using the incident in promotional material. [54] In Mr More s submission, the appropriate sentence for Mr Dixon was a fine. [55] We do not accept that submission. In our view there was a significant breach of trust notwithstanding that this was not a case of hacking, as indeed Judge Phillips R v Dixon, above n 1, at [9]. R v Hayes (2006) 23 CRNZ 547 (CA). At [13].

14 expressly acknowledged. 26 The CCTV footage was there for the specific purpose of protecting patrons of the bar; Mr Dixon s use of the footage was for the opposite purpose of exploiting one of the patrons. As a result of his employment, Mr Dixon knew of the footage s existence and was entrusted with access to it. He misled the receptionist 27 and dishonestly accessed the footage for an unauthorised purpose. He did so at the expense of his employer s reputation and that of the bar. As a result of his actions, his employer s contract with Base was put in jeopardy. [56] We are satisfied that the sentence imposed was within range and confirm that is so whether the offence was one of obtaining a benefit or property. [57] The appeal against sentence is accordingly dismissed. Mr Dixon must report to the Community Probation Service by am on 21 July 2014 to resume his community work sentence. The sentence of community detention will also resume on 21 July Postscript [58] At the conclusion of the hearing before us, Mr More advised that Mr Dixon wished to listen for himself to the audio recording of the Judge s summing-up. Earlier, Mr Dixon had raised concerns that the Judge had made an unfair and highly prejudicial comment to the jury which had been omitted from the written transcript. Registry staff in this Court had listened to the relevant sections of the audio tape and advised that the transcript was complete and accurate. [59] In response to Mr More s request, we issued a minute directing that Mr Dixon was allowed seven days to listen to the audio tape. The minute further directed that in the event Mr Dixon wished to advance further argument based on the summing-up, he might do so only through his counsel. Leave was reserved to Mr More to file a supplementary memorandum for that purpose within a further seven days At [5]. Mr Dixon said in evidence that he told the receptionist Mr Tindall had been in a fight.

15 [60] On 13 March 2014, Mr More filed a memorandum. It advised that Mr Dixon had now listened to the audio recording and had sent Mr More a booklet of documents comprising an outline of submissions prepared by Mr Dixon and related additional materials. Mr More attached Mr Dixon s submissions and additional materials to his memorandum without comment. [61] The new submissions do not contain any reference to comments omitted from the transcript or anything arising from the audio recording. Instead, the submissions raise allegations against trial counsel and alleged flaws in the summing-up as recorded in the written transcript. They are therefore outside the scope of the leave granted and for that reason alone are rejected. In any event, we are satisfied that none of the matters raised, whether viewed individually or collectively, would justify quashing the conviction. Solicitors: Crown Law Office, Wellington for Respondent