England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice The Strand London WC2A 2LL
		14 December 2010

Tuesday 14 December 2010

LORD JUSTICE MOORE-BICK:

1. On 17 March 2010, in the Crown Court at Newcastle upon Tyne, before His Honour Judge Whitburn QC, the appellant was convicted of two counts of distributing infringing copies of copyright works and on 18 July he was sentenced to a total of 15 months' imprisonment. He now appeals against conviction by leave of the single judge. His application for leave to appeal against sentence has been referred by the Registrar to the full court.
2. The case concerned the supply of digital equipment (known perhaps unkindly as "jukeboxes") and related equipment to premises such as public houses, bars and other places of entertainment. The equipment is sophisticated. It holds music and videos in digital format which can be played through attached speakers or television screens. Since the music and the videos are subject to copyright, in order to trade lawfully the operator of the system is required to obtain a licence from one of a number of organisations which deals in these matters: the Phonographic Performance Limited ("PPL"), the Mechanical Copyright Protection Society (both of those in respect of recorded music), and Video Performance Limited and Mechanical Copyright Protection Society again in respect of music videos.
3. The appellant and two co-accused traded as companies by the name of Rent-a-System Co Limited, Access All Areas Productions Limited, Tracksalive and Mixopia Multimedia Limited. They were all companies which had originally been set up by the appellant's father, Malcolm Wylie, and of which both, but latterly only the appellant, were directors. The companies rented the equipment to numerous customers in public houses, clubs and similar venues. Customers were required to purchase monthly updates of recently released music on compact discs. They were also charged an annual licence fee, which they were told covered performing rights fees and maintenance of the system. In fact, unbeknown to the customers, no such licences were obtained.
4. Count 1 on the indictment covered the period of trading between May 2003 and the appellant's arrest on 21 May 2008, following a raid on the companies. Despite being arrested on that occasion, the appellant continued to trade through the companies from the same premises and under the same names. Count 2 covered trading during the latter period.
5. The prosecution case was that the appellant and his co-accused had falsely claimed that their systems were properly licensed when in fact to their knowledge they were not. The prime mover behind the business was the appellant's father who, having become disqualified from acting as a director by reason of his bankruptcy, carried on as a shadow director of the companies, using the appellant as a front after his bankruptcy in July 2003.
6. The defence case was that the appellant did not know, nor had he any reason to believe, that the company was infringing copies of copyright works. His case was that he trusted his father who told him that the licences were in place, and did not himself know the true position. He said that his part in the business was very modest, being limited essentially to creating and distributing the monthly update discs.
7. The issue for the jury was whether the appellant knew or believed that companies of which he was a director were distributing infringing copies of copyright material.
8. In the course of the trial it emerged that the appellant had had one previous brush with the law. The company Access All Areas Entertainment Limited had been incorporated on 9 September 2003. The appellant and his father (Malcolm Wylie) were the directors at that time. It was wound up in November 2005, having become insolvent. In October 2008 it came to the attention of the regulatory authorities that the appellant was acting as a company director and in the management of a company named Access All Areas Production Limited. He was interviewed by a representative of the Official Receiver, Mr Felton, and subsequently prosecuted under section 216 of the Insolvency Act 1986. That section prohibits for a period of five years a person from being a director of, or concerned in the management of, a company which has the same name as, or a similar name to, a company which went into liquidation while he was one of its directors. He pleaded guilty to that charge and was sentenced to 40 hours' community service.
9. The prosecution were not aware of that conviction which had not found its way onto the police national computer, but on 9 March 2010, while the appellant was in the course of giving evidence at the trial, they took steps, "acting on a hunch", to make inquiries which revealed that proceedings might have been taken against the appellant. Prosecuting counsel very properly informed the judge and the appellant's counsel of what had been discovered. As a result it was agreed that he could say, when asked, that he had never been in trouble with the police before, and for the matter to be left there.
10. The reference to trouble with the police was of importance because, in attempting to deal with some embarrassing answers that he had given in interview to the police, it was the appellant's instructions to his counsel that he had been unfamiliar with the circumstances of a formal interview of that kind and had not conducted himself in an appropriate manner.
11. On 10 March the appellant continued giving his evidence, in the course of which the following exchanges occurred:

"Q. Did you receive letters from Keith Felton?

A. No, I didn't and Lindsay would not pass them on to me either.

....

Q. Do you remember if you attended any interview?

A. Um, I remember going to one. It was literally a five to six minute interview.

Q. Go there with anyone?

A. Yes, William Ross.

Q. What about?

A. It was to do with the company name change, AAA Entertainment being too close to AAA Productions.

Q. How long for?

A. Literally five minutes.

Q. Who arranged the appointment?

A. My father did.

....

Q. Never arrested or interviewed before?

A. No, this was all new to me.

....

Q. Running through the caution -- what did you think the caution meant?

A. I had no idea. I had absolutely no idea. This was all new to me and, to be honest, I just could not compute.

....

Q. What did you think would happen with this case?

A. I'd no idea. I'd never been in trouble before."

The answer "I'd never been in trouble before" led the prosecution to make an application to put in evidence the appellant's previous conviction under the provisions of section 101(1)(f) of the Criminal Justice Act 2003 in order to correct what was said to be a false impression created by the appellant.

12. On 11 March Mr Felton attended court, bringing with him copies of the transcript of his interview with the appellant. Mr Groome, who appeared on behalf of the prosecution at the trial and on this appeal, has told us, and we have no difficulty in accepting, that he had intended to put the contents of the interview to the appellant in cross-examination to correct the false impression he had given about previous interviews and as evidence going to the heart of the case as showing that Mr Felton had discussed with the appellant the duties of company directors.
13. No application of that kind was necessary, however, because counsel for the appellant readily accepted that the interview could "go in", and in due course it became an exhibit in the case.
14. The first two grounds of appeal are that the judge was wrong to allow evidence of the appellant's previous conviction to go before the jury because it allowed the prosecution to make use of it as a vehicle for a wide-ranging attack on the honesty of the appellant and his father.
15. The third and fourth grounds of appeal are that, having done so, the judge summed up in a way that distracted the jury's attention from the real issue in the case, namely whether the appellant had known that his father had not obtained licences for the music he was sending out in the monthly updates.
16. The emergence of the evidence relating to the appellant's previous conviction during the course of his evidence put his counsel, Mr Casella, in a difficult position, although the difficulty was partly of the appellant's own making since he had not told his counsel about it. The compromise originally settled on by agreement with the judge was, in our view, generous to the appellant. But once he said that he had not been in trouble before, thereby suggesting that he had not been in trouble of any kind, we do not think that the judge can be criticised for allowing the prosecution to adduce evidence of the previous conviction in order to set the record straight. The suggestion that he should have excluded that evidence in the exercise of his powers under section 78 of the Police and Criminal Evidence Act 1984 is, in our view, unrealistic. There was a significant danger that the jury would be misled unless the position were clarified.
17. Mr Casella submitted, in the alternative, that the judge had failed to pay sufficient heed to the requirement in section 105(6) of the Criminal Justice Act that evidence is admissible under section 101(1)(f) if it goes no further than to correct the false impression. In this case, he said, it would have been enough to have given evidence of the fact of the conviction with such explanation of the background as was necessary to enable the jury to understand its nature. That did not, in his submission, require the admission of the full interview with Mr Felton.
18. All that may be true, but it has become increasingly apparent in the course of argument that the conviction was not really the problem in this case. It is the use of the interview which the appellant seeks to challenge. However, that interview had a much wider relevance, not only because the appellant had already given certain evidence, which it tended to contradict, but also because it dealt with the previous trading history of the companies, the duties of directors, and the appellant's knowledge of the manner in which the companies had been conducting their business. It had direct relevance to the matters with which he was charged because it dealt with the companies' unlawful business practices and thus with the absence of licences for the music they were selling.
19. Although Mr Casella was inclined to blame himself for having failed to object to the use of the interview by the prosecution, we think that his reaction at the time in recognising its obvious relevance was entirely understandable. We do not think that the judge would have excluded it had he been asked to, or that it would have been right for him so to do.
20. We turn next to the manner in which that evidence was handled by the judge in the summing-up. Mr Casella has drawn our attention to passages in the summing-up in which the judge recited at length from the interview with Mr Felton. It is clear that much was made of it and that what was being put before the jury went well beyond what was necessary simply to correct a false impression that the appellant had not been in trouble before. He said in effect that the circumstances giving rise to the previous conviction were paraded at length, as might have been appropriate if there had been a question whether the appellant had a propensity to dishonesty but was unnecessary simply to correct a false impression of limited extent.
21. The judge certainly dealt with the evidence of the interview at some length but, as we have sought to explain, it was relevant to other aspects of the case. Evidence tending to show that the business was run dishonestly had a bearing on whether the appellant was aware that those who were to provide the necessary licences were not receiving payment and that the licences were therefore not being granted.
22. It is true that the judge failed to give the jury an explicit warning that the appellant's conviction could not of itself prove guilt, but by that stage of the trial the fact of the conviction had receded very much into the background. It is not the fact of the conviction which is said to have been damaging but the contents of the interview. In our view any further dwelling on the conviction was likely to have done the appellant more harm than good.
23. We remind ourselves that ultimately the question for this court is whether the conviction on count 1 is unsafe by reason of the admission of the evidence of the previous conviction, the use the prosecution were allowed to make of the interview with Mr Felton, and the way in which the jury were invited to approach it. We are satisfied that it is not and that the appeal must therefore be dismissed.
24. We turn to the application for leave to appeal against sentence. When passing sentence the judge, who it must be remembered was well placed following the trial to assess the true culpability of the applicant, said that the applicant was clearly aware before the police raid in May 2008 that the business was being run dishonestly and that after that raid he continued to play a significant role in it. The judge regarded the applicant's conduct as amounting to a clear and flagrant breach of the law.
25. Mr Casella has submitted on the applicant's behalf that the equipment supplied by the companies was directed at a small market and that he himself had been drawn into what was a dishonest business by his father. It is said that the judge failed to have sufficient regard to the appellant's age (he was in his mid twenties when these offences were committed), the fact that he had not previously served a sentence of imprisonment, the good features of his character, and his relatively junior role in the enterprise as a whole.
26. All those are proper matters to be taken into account, but they do not alter the fact that the applicant was knowingly involved in a dishonest enterprise on a significant scale. This was not a common example of retailing counterfeit goods. In this case the goods were genuine, but the intellectual property they represented had been stolen rather than purchased. The sums involved were substantial. The judge estimated the amounts lost to performers and producers at somewhere between £100,000 and £400,000.
27. The guidelines published by the Sentencing Guidelines Council suggest that for a simple theft involving sums of that order a significant custodial sentence is appropriate, particularly when it involves conduct persisted in over a long period of time. The applicant's father, who was the prime mover in the whole enterprise was sentenced to three years' imprisonment following a guilty plea.
28. If one views the matter in that context, as we think we properly should, an overall sentence of fifteen months' imprisonment cannot be said to be wrong in principle or manifestly excessive, having regard to the duration and persistence of the offending and the amounts of money involved. The application for leave to appeal against sentence is therefore refused.

MR GROOME: My Lord, can I mention one final matter?

LORD JUSTICE MOORE-BICK: Yes?

MR GROOME: This prosecution was, of course, a private prosecution brought by the British Phonographic Industry on behalf of PPL. It is to section 17 of the Prosecution of Offences Act 1985 that I direct my Lords. It is within the power of the court to award a prosecutor's costs from central funds. The usual order is for those costs to be taxed. There is a Practice Direction which is also set out in Archbold. The section is at chapter 6, paragraph 23.

LORD JUSTICE MOORE-BICK: Do you have a page reference?

MR GROOME: It is page 956 of the 2011 edition of Archbold.

LORD JUSTICE MOORE-BICK: We are on the 2010 edition, which does not help.

MR GROOME: It is chapter 6, paragraph 23. Section 17 provides for the court to order a payment out of central funds. Section 17(1) provides for such an amount as the court considers reasonable and sufficient to compensate a prosecutor. Subsection (2) makes it clear that this power only exists in respect of private prosecutions.

LORD JUSTICE MOORE-BICK: Yes.

MR GROOME: And there is a Practice Direction that is also set out in Archbold. It is at chapter 6, paragraph 109(a). The Practice Direction is Costs in Criminal Proceedings.

LORD JUSTICE MOORE-BICK: Just a moment, we have the 2011 edition. What page are you on?

MR GROOME: It is page 992.

LORD JUSTICE MOORE-BICK: Yes.

MR GROOME: In those circumstances I would invite my Lords to make the usual order which is prosecution costs from central funds, to be taxed.

(The court conferred)

LORD JUSTICE MOORE-BICK: Yes, we are satisfied that it would be right to make an order in respect of your costs, but they will have to be taxed.

MR GROOME: Thank you very much.

LORD JUSTICE MOORE-BICK: Thank you both very much.