The Aksentijevic decision and commercial electronic messages

Introduction

Aksentijevic v Department of Internal Affairs [2016] NZHC 226 is a recent decision of the New Zealand High Court in relation to breaches of the Unsolicited Electronic Messages Act 2007 ("the Act").  The District Court (“DC”) found Aksentijevic (“A”) breached sections 9, 10 and 11 of the Act.  The DC imposed a $12,000 penalty under section 45 of the Act.  A appealed to the High Court (“HC”).

Factual background

The key purposes of the Act were to:

• Prohibit the sending of unsolicited commercial electronic messages with a New Zealand link;
• Require that commercial electronic messages have a functional unsubscribe facility and include accurate information about the sender of the message; and
• Prohibit address-harvesting software or a harvested-address list from being used to send unsolicited commercial electronic messages in contravention of the Act.

An unsolicited “commercial electronic message” was defined in section 4 of the Act as a commercial electronic message that the recipient has not consented to receiving.

In the case, the Department of Internal Affairs (“DIA”) had received various complaints regarding electronic messages individuals had received.  These messages contained links to Google Play, CrazyTilt (an app A developed), and included statements about the benefits of CrazyTilt and others which were disparaging about other apps.  A said he had sent the messages in response to an abusive campaign against him – 2,230 messages had been sent.  The DIA obtained and carried out a search warrant of A’s home.

There was no argument that the emails were electronic messages, sent from A, and contained a New Zealand link.  The issue on appeal was whether the DC was correct in concluding that the messages were unsolicited “commercial electronic messages”.

Finding

Were the electronic messages “commercial electronic messages”?

Section 6(a) of the Act defined a “commercial electronic message” as an electronic message that markets or promotes goods or services or a business/investment opportunity, or which assists or enables a person to dishonestly obtain a financial advantage or gain from another person.  The HC found that the word “commercial” was not intended to colour the meaning of “commercial electronic message”, but rather the words were a label, with meaning to be determined from the definition.

While section 6 of the Act contained no definition of “market” or “promote”, the HC found that both were words with reasonably plain meanings.  “To market” could be “to offer for sale”, while “to promote” was to present something as worthwhile.  On those terms and based on the electronic messages A had sent, CrazyTilt had been promoted on the Google website.

The HC found that the purposes of the Act:

• Supported a broad interpretation of “to market” and “to promote” – had Parliament wanted a narrow meaning, to the effect of “sale” or “exchange for value”, it would have used such wording; and
• Were not expressed so as to restrain unsolicited electronic messages designed to sell goods or services, but rather were protective in relation to recipients of messages and organisations transmitting messages, with a further objective of reducing costs to businesses in the wider community.

The HC referred to the Electronic Messages Bill 2005 (281-1) (“Bill”), which provided that the definition of “commercial electronic message” in the Bill was “an electronic message that has, as its primary purpose … marketing or promoting” of goods or services.  While the Bill provided that promotional electronic messages could be sent, there had to be provision for the recipient to later opt out.  As enacted, the definition of commercial electronic message had been broadened, but the opt out feature had been removed.

The HC was satisfied that proof of a commercial/business objective, or an intention to make money, or a requirement for A to be engaged in trade, was not required.

Did the recipients of the messages consent to receiving them?

Section 9(1) of the Act prohibited a person from sending, or causing to be sent, unsolicited electronic messages with a New Zealand link.  Section 9(3) of the Act provided that the onus of proof in respect of consent lay with the person who contended that a recipient had consented to receiving a commercial electronic message.

As such, A had to prove, on the balance of probabilities, one of the three alternatives in the definition of “consented to receiving” set out in section 4, being:

• Express consent had been given by the relevant electronic address-holder;
• Consent had been reasonably inferred through the conduct, business and other relationships of the persons concerned; or
• Deemed consent was present, which applied where an electronic address was consciously published by a person in their official business/capacity, the publication was not accompanied by a statement requesting that unsolicited electronic messages not be sent, and the message was relevant to the person’s official business/capacity.

A had to establish consent existed from all 439 individual recipients in respect of all emails received.  There was no proof of consent from them and consent could not be inferred from the parties’ relationship.  In cross-examination, A acknowledged that the recipients had not wanted to receive the messages.  The absence of consent could be inferred from the abusive nature of A's messages (i.e. inferred consent could not extend to such abusive emails).  It was no defence that A may have received abusive emails from the recipients first.  The HC was satisfied there was no error by the judge in his conclusion that section 9(1) was established.

Section 14 of the New Zealand Bill of Rights Act 1990 (“NZBORA”)

A argued the DIA breached section 14 of NZBORA, being A’s right to freedom of expression.  The HC found that A was not entitled to any relief from the proceedings based on this, which extended to actions taken by the DIA in issuing and prosecuting the proceeding.

Sections 10 and 11 of the Act

Section 10 of the Act required that accurate sender information be included in each message.  None of the 2,230 messages included such information – A was not clearly identifiable as the person who had authorised the sending of the messages, and there had been no way to contact him.  This information had to be contained in the message itself – it did not matter what could be obtained through the link.  The HC found that if it accepted the contrary, this would have significantly extended the scope of section 10 beyond what the clear words indicated, undermining the objectives of the Act.

Section 11 required that every commercial electronic message sent contain a functional unsubscribe facility.  The Court was satisfied section 11 was breached as none of the messages included a facility that recipients could use to instruct A that they did not want to receive further emails.  The facility could not be sent in a separate email, but had to be included in the message itself.

Validity of the search warrant

A argued the DIA’s search warrant did not satisfy section 6 of the Search and Surveillance Act 2012 (“SS Act”), requiring that suspected offences by punishable by imprisonment.  He believed the warrant was issued under section 51 of the Act, meaning section 6 had no application.

Section 51 of the Act makes provision for an enforcement officer to apply for a search warrant under the SS Act.  A contended that, because of this reference, and section 107 of the SS Act, section 6 of the SS Act did not apply.  A had misinterpreted its application.  Section 107 prescribes when a search warrant is invalid and is directed to two types – those issued by police for offences punishable by imprisonment, and those issued pursuant to other enactments, which includes section 51 of the Act.  Section 51 of the Act is the provision determining invalidity, while section 6 of the SS Act has no application.

Penalty

Section 45 of the Act allowed the HC to order a person pay a pecuniary penalty (maximum $200,000) for “a civil liability event”, being a breach of sections 9(1), 10 or 11(1).  Section 49 provided that such proceedings were civil proceedings, with the standard of proof being the balance of probabilities.  In the alternative, the DIA could have issued a civil infringement notice.

A’s appeal against the penalty was an appeal against a civil proceeding decision.  Such an appeal was only allowed where there was an error of principle, relevant considerations were not taken into account, irrelevant considerations were taken into account, or the decision was wrong.  The HC also took account of A’s submissions and financial means.

Regarding the gravity of the breach, the first enquiry was in relation to the number of messages sent and addresses to which those messages were sent.  These were mandatory considerations.  2,230 emails were sent to 439 addresses.  The HC described these numbers as “trifling” in comparison to other cases such as:

• Mansfield – 1,000,000 emails sent to 80,000 addresses, starting point was $100,000.
• Atkinson #1 – 2,000,000 emails sent, with the defendant taking a $1.6 million commission.  Starting point was $200,000 with a penalty of $100,000 given.
• Image Marketing – 45,000 texts sent in a month and 519,000 emails the next year.  Starting point was $160,000, which was reduced due to co-operation.

An assessment required that numbers be viewed in absolute terms and comparatively with other cases.  The HC referenced using percentages based on the above comparative figures.  Using that method, the HC thought that the DC imposed starting point of $12,000 for A was too high – it compared A’s case with Mansfield and calculated that the messages sent by A were only 0.25% of that in Mansfield, with 0.25% of the Mansfield $100,000 starting point being $250.

Further, there was no evidence A had sought to make money, which either substantially reduced the gravity of offending, or was a significant mitigating circumstance.  The evidence was that A was having an argument with a small number of people, which was a long way removed from the activity the legislation was directed at.

In the alternative, the DIA could have issued a civil infringement notice, which the HC saw as being more relevant to the assessment of penalty.  The HC looked at the penalties for a civil infringement notice, being $200 for an individual and $500 for a company, which was further indication that the DC $12,000 starting point was too high.  Taking this all into account, the HC considered the maximum penalty should be $1,000, but given that it was low level offending and A had modest financial means, the penalty was determined at $250.

Conclusion

A’s appeal against the liability decision was dismissed, but the appeal against penalty was allowed and a $250 penalty was substituted.  The decision demonstrated the importance placed on the purpose under the Act, and the intention of the party sending the commercial electronic message.

If you would like further information please contact Laura Monahan on 07 958 7479.