Watchorn v R

• Jurisdiction: New Zealand
• Judge: O'Regan P)
• Judgment Date: 07 October 2014
• Neutral Citation: [2014] NZCA 493
• Docket Number: CA385/2014
• Court: Court of Appeal
• Date: 07 October 2014

BETWEEN

James Winston Watchorn

Appellant

and

The Queen

Respondent

[2014] NZCA 493

Court:

O'Regan P, Simon France, and Mallon JJ

CA385/2014

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal against conviction under s249(1) Crimes Act 1961 “CA” (accessing computer system for dishonest purpose) and sentence of imprisonment of two and a half years — appellant faced three charges having obtained “property” (data) by accessing the computer system of his former employer — subsequent to the appellant's conviction the Court of Appeal issued Dixon v R which held that “data” obtained from a computer was not property asdefined, but that on the facts of that case a “benefit” had been obtained, which also constituted an offence under s249(1) CA — common ground that conviction could not stand — whether the Court should substitute convictions based on the obtaining of a “benefit”, rather than “property” — whether a dishonest purpose was an ingredient of an offence under s 249(1) — whether the Judge was correct to conclude that there was no evidence of a claim of right — whether evidence of later conduct could be propensity evidence in relation to earlier conduct — whether the sentence was manifestly excessive because the Judge had adopted too high a starting point.

Counsel:

S W Hughes QC for Appellant

M D Downs for Respondent

• A The appeal is allowed.

• B The three convictions entered in the District Court are quashed.

• C We decline to exercise the power under s 386(2) of the Crimes Act 1961 to substitute verdicts of guilty for accessing a computer system and thereby dishonestly and without claim of right obtaining a benefit for the verdicts found by the Judge.

• D We do not order a retrial.

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by O'Regan P)

O'Regan P)

Table of Contents

	Para No
Introduction	[1]
Section 249	[3]
Issues
Conviction appeal	[4]
Sentence appeal	[10]
Factual background	[12]
Definition of “property”	[22]
“Dishonestly” accessing a computer system	[24]
Claim of right	[34]
Propensity evidence	[39]
Unreasonable verdict	[48]
Drag and drop	[51]
T drive	[54]
USB stick	[55]
Lie	[56]
“I got what I wanted”	[58]
Home computer	[59]
Response to solicitors' letter	[60]
Canada	[62]
Conclusion	[63]
Outcome: conviction appeal	[64]
Should we replace the convictions?	[65]
The parties' submissions	[67]
Police v Le Roy	[69]
Legislative history	[75]
Statutory context	[77]
The “benefit” obtained by Mr Watchorn	[82]
Sentence	[87]
Should we order a new trial?	[100]
Result	[101]
Postscript	[102]

Introduction

1 The appellant, James Watchorn, was convicted after a Judge alone trial before Judge Roberts in the New Plymouth District Court, of three charges of accessing a computer system and thereby dishonestly and without claim of right obtaining property. 1 Judge Roberts sentenced the appellant to a term of imprisonment of two and a half years. 2 The appellant appeals against both conviction and sentence.

2 We heard the appeal on 21 August 2014. At the conclusion of the hearing we reserved our decision. However, we indicated that we had reached a clear view that even if the conviction were to stand, the sentence of imprisonment was not appropriate. Having reached that view, we indicated to counsel that we were prepared to grant bail to the appellant pending the delivery of this decision. We granted bail the following day. 3

Section 249

3 The charges faced by the appellant were brought under s 249(1) of the Crimes Act 1961. Section 249 provides:

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

  • (b) causes loss to any other person.

• (2) Every one is liable to imprisonment for a term not exceeding 5 years who, directly or indirectly, accesses any computer system with intent, dishonestly or by deception, and without claim of right,—

  • (a) to obtain any property, privilege, service, pecuniary advantage, benefit, or valuable consideration; or

  • (b) to cause loss to any other person.

• (3) In this section, deception has the same meaning as in section 240(2).

Issues

Conviction appeal

4 The three charges on which the appellant was convicted referred to his having obtained “property” on accessing the computer system of his former employer, TAG Oil (NZ) Ltd (TAG). After Judge Roberts issued his verdict, this Court delivered judgment in Dixon v R. 4 Dixon also concerned an appeal against a conviction under

s 249(1). This Court found that data obtained from a computer was not “property” as defined, but on the facts of that case found that Mr Dixon had obtained a “benefit”, which also constituted an offence under s 249(1). The Court therefore quashed his conviction but replaced it with a conviction for accessing a computer system and thereby dishonestly and without claim of right obtaining a benefit

5 It is common ground that this Court's finding in Dixon, that data obtained from a computer is not “property”, is binding on us and that the conviction against Mr Watchorn therefore cannot stand. 5 However, counsel for the Crown, Mr Downs, submitted that the Court should follow the course adopted in Dixon and substitute one or more convictions based on the obtaining of a “benefit”, rather than “property”. The issue that arises is whether it is appropriate to do so in this case.

6 Counsel for the appellant, Ms Hughes QC, submitted that a necessary ingredient of the offence was that the appellant had a dishonest purpose when he downloaded the data from the TAG computer system. She argued that the evidence did not substantiate a finding of dishonest purpose. The issues that arise are whether a dishonest purpose is an ingredient of an offence under s 249(1) and, if so, whether there was proof that such a dishonest purpose existed.

7 The Judge found that there was no evidence before the Court that the appellant had a claim of right in relation to the downloaded data. 6 Ms Hughes argued that the Judge erred in this respect, and, in effect, reversed the onus of proof. A further issue that arises is therefore whether the Judge was correct to conclude that there was no evidence of a claim of right in this case.

8 The downloading of information from the TAG computer system to which the counts in the indictment relate took place on 7 June 2012 (the 7 June download). There was evidence that the appellant also downloaded sensitive information from the TAG computer system on 31 July 2012 (the 31 July download). Evidence of the later download was admitted as evidence at the trial. Ms Hughes argued that the

Judge erred in admitting this evidence. The issue we must resolve is whether the evidence ought to have been admitted

9 Ms Hughes also argued that a number of factual findings were unsupported by the evidence, meaning that the verdict was unreasonable. So another issue for resolution in the conviction appeal is whether the verdict was unreasonable.

Sentence appeal

10 The appeal against sentence is advanced on the basis that the sentence was manifestly excessive because the Judge adopted too high a starting point. It is argued that a non-custodial sentence ought to have been imposed.

11 Before we address these issues, we will set out the factual background.

Factual background

12 On 7 June 2012, the day on which the downloading that founded the charges occurred, the appellant was an employee of TAG, an oil and gas exploration company, engaged in both prospecting and production of oil and gas. It is common ground that on this date the appellant downloaded extensive and sensitive geoscience data from TAG's computer system onto a portable hard drive. The whole of the “Z drive” and the “Geoscience” folder were downloaded. An executive of TAG described the Geoscience folder as holding the “secret recipe” as it contained data relating to the discovery of sites of oil and gas. There is no dispute that the information had a very high value to TAG and that, if it had been disclosed to a competitor, that would have been extremely damaging to TAG and extremely beneficial to the competitor.

13 There is some dispute about the method adopted by the appellant for the downloading exercise, and whether he was aware of the scope and value of the data he downloaded. The evidence was that the downloading of the first tranche of data from the TAG system to the appellant's personal hard drive took from just after 4 pm to after 7 pm, and the second download took from about 6.30 pm until about 9.30 pm. That gives an indication of the amount of data involved.

14 On the day after the download took place, the appellant and his family went to Canada for four weeks. The Judge accepted that the reason for this visit was to allow Mr Watchorn to visit his mother, who was ill. While he was in Canada, the appellant met a representative from a company called New Zealand Energy Corporation Ltd (NZEC) which is based in Canada but carries on business in New Zealand. NZEC is a competitor of TAG. A job offer with NZEC followed this meeting.

15 After the appellant returned from Canada, he told a work colleague that he intended to leave TAG and join NZEC. Subsequently, on 27 July 2012, an IT contractor engaged by TAG made a directory of files on the appellant's hard drive. While this was happening, the appellant said to his colleague that he had “got what he wanted”.

16 On 31 July 2012, the appellant downloaded similar TAG...