Excellently well argued, I am sure Melon Farmers everywhere will support
Greg's case
From Erotic Trade Only magazine, May 2004 issue
INTRO: We all know that the law relating to the supply of R18
materials via mail order is a bit of an ass, but three recent court cases
have all upheld the view that it is an offence. Here, Greg Hurlstone,
Director of Prime Time Promotions (Shifnal) Limited, explains in more detail
what this means for the industry and what it could eventually mean for the
retail section as a whole.
STARTS: Prime Time Promotions (Shifnal) Limited, myself and my co-director
Gary Campbell were recently the subject of numerous charges under the Video
Recordings Act 1984 involving the sale and advertising of Restricted 18
classified video works. Whilst the charges themselves were quite complex
there were two legal principles which, when determined by the Court, could
be applied to the charges to determine guilt.
The two issues of concern were as follows:
a) When a video or DVD is sold where is the place of supply?
b) Does an Internet website constitute an "offer to supply"?
The prosecution submitted that when a video is sold the place of supply is
the place of "delivery". It is an offence under the Act to supply a
Restricted 18 video at any place other than in a licensed sex shop and in a
mail order transaction, as the place of delivery is the home address of the
customer, then an offence is being committed.
We argued that our premises are a licensed sex establishment within the
meaning of the act and that the place of supply was not the place of
delivery but the place of the sale. In a mail order transaction the funds
are received, and the product is packaged, within the licensed sex
establishment so no offence is being committed. Delivery was in fact the
supply of a further service, and not the supply of the product itself.
The prosecution submitted that an Internet website constitutes an "offer to
supply" under the Video Recordings Act and that it is an offence for anyone
to "offer to supply" a Restricted 18 video other than in a licensed sex
establishment. Thus every time an Internet user viewed the website at home
or place of work, an offence was being committed.
We argued that a web site cannot be an "offer to supply" but is rather what
is commonly referred to as an "invitation to treat". There is no "offer to
supply" or "offer to sell", rather the website is a display which the
customer peruses prior to making an "offer to buy". This is a legal concept
that applies to all shop displays, mail order catalogues etc.
The Court agreed with the prosecution in both instances. We were not
surprised at the verdict given that in the past fortnight two similar cases
(Pabo and Interfact) had been heard and on both occasions guilty verdicts
had been returned.
Prime Time and its Directors intend to appeal the verdict. It is our view
that the prosecution and the Court have applied "criminal" definitions to
the meaning of "supply" and "offer to supply" and taken Section 12 of the
Video Recordings Act in isolation and not considered the wide ranging
implications of their decisions.
OFFER TO SUPPLY
It is our view that whilst the Video Recordings Act 1984 imposes criminal
penalties it is not in fact a piece of criminal legislation, as if it was it
would be completely unworkable (the Companies Act imposes criminal penalties
yet is not criminal legislation). Section 12 (1) of the Video Recordings Act
states that where a video recording carries a Restricted 18 classification
any person who other than in a licensed sex establishment a) supplies the
product or b) offers to do so, is committing an offence.
When considering Section 12(1)(b) we should first consider what is actually
meant by the phrase "offer to supply" and then consider where the "offer to
supply" is made. The prosecution and the Courts concluded that our website
was indeed an "offer to supply" and that because it was seen in places which
were clearly not licensed an offence was being committed. We do not dispute
the latter part of the argument. What we dispute is that the website is an
"offer to supply" at all.
The phrase "offer to supply" is also used in Section 11 of the Video
Recordings Act and it is this that causes us the most difficulty. Section 11
states that if a video recording has a classification which restricts its
supply to persons who have attained a certain age (for example a 15 rated
title can only be supplied to persons aged 15 or above) then "a person who
supplies or offers to supply" a video recording to a person who has not
attained that age is guilty of an offence.
Clearly, if our website constitutes an "offer to supply" then so does every
commercial website advertising videos and DVDs for sale. There cannot be one
definition for the sex industry and another for more mainstream retailers.
The prosecution submitted and the Court agreed that merely viewing the
website constituted the "offer to supply". It therefore follows that every
time a child sees a 15 or 18 rated video on a site such as Amazon.co.uk an
offence is being committed.
In the Pabo and Interfact cases catalogues were construed as being "offers
to supply". The courts concluded that every time the catalogue was viewed an
"offer to supply" was being made. The offence was committed because the
"offer to supply" was being made other than in licensed premises. If I were
to display R18 videos at my local car boot sale then this too would
constitute an "offer to supply" so there is no doubt that shop displays
will, if the same tests are applied, also be seen as an "offer to supply".
What this means is that every time a minor views a commercial website, or
reads a catalogue or even enters a retail or rental store, and is faced with
product which is age restrictive, an offence is being committed under
Section 11 of the Act!
Should we lose our appeal, the result will be that no company can display
for sale a video/DVD or computer game with a classification greater than a
PG! This would spell the end of the video industry in the UK. Surely this is
not the intention of the Video Recording Act. We are therefore firmly of the
opinion that the conclusions reached by the Trading Standards Service and
the Court to date have to be incorrect and that to apply a criminal standard
to the definitions in this Act is a flawed approach.
PLACE OF SUPPLY
The question of the place of supply is rather more complex. The Video
Recordings Act defines supply at section 1 (4):
"Supply" means supply in any manner, whether or not for reward, and,
therefore, includes supply by way of sale, letting on hire, exchange or
loan; and references to a supply are to be interpreted accordingly.
The prosecution submitted that the place of supply is the place of delivery
and that the phrase "supply by way of sale" means a supply pursuant to a
sale. It is our view that the "sale, letting on hire, exchange or loan" are
the supply itself and that if some form of delivery is required pursuant to
the original supply then this is the supply of an additional service.
Our view is consistent with the definitions adopted in all contract law,
commercial law and most importantly, VAT law and it should be remembered
that we are dealing with commercial activities involving legal products. If
I were to contact H M Customs & Excise and ask them to clarify the place of
supply when I sell a video recording they would, quite rightly, advise that
it is the place where the goods are appropriated to the contract of sale.
Hence, when we sell product abroad we have to account for VAT on that sale
even though the place of delivery is in another country.
One of the key arguments put forward by the prosecution is that the
Government would not have enacted legislation that could be circumvented by
the use of a third party based abroad (here we are considering the notion of
a "primary supplier" based in the UK who sells R18 product to a foreign
company which then sells that product back to UK residents). Unfortunately,
the Act as it is written cannot prevent this.
If the place of supply is the place of sale then a foreign company which
sells back to the UK is not committing an offence as the supply takes place
under the jurisdiction of a foreign court. The "primary supplier" based in
the UK had originally made an exempt supply under Section 3.(4)(b).
If the place of supply is the place of delivery, then the "primary supplier"
sells product to the foreign company and the place of supply is abroad. That
supply can then only be prosecuted in the foreign court. At this point in
the argument the prosecution will advise that if the "primary supplier"
knows the product is going to be shipped back to the UK then he can be
charged as he will be aware of an "eventual supply" to the public. The
problem here is that the original supply took place abroad and the notion of
"eventual supply" is part of British law and cannot be applied to a
transaction that can only be prosecuted in a foreign court. The prosecution
cannot possibly argue this point as they have long maintained that the only
reason foreign companies have not been prosecuted is that they will decline
to appear in a UK court. Similarly, the "primary supplier" based in the UK
would decline to appear in the foreign court.
Our question then is not, would the Government enact legislation which can
be circumvented by using a third party, because it clearly can, but would
the Government enact legislation which allows for no control over a "primary
supplier" operating within the UK?
If the supply takes place at the point of sale then all UK residents who
sell R18 material must abide by the Video Recordings Act. There is little
that can be done to stop an individual selling the product on a wholesale
basis abroad with a view to it being re-imported, however if the product is
supplied within the UK it must be done with a view to the eventual supply to
the public taking place in a licensed sex shop.
If the seller wishes to deal direct with the public then that person is
controlled by the licensing laws (Local Government Miscellaneous Provisions
Act 1982).
If a "primary supplier" wishes to supply a third party within the UK knowing
that the R18 product will eventually be sold from an unlicensed premises
then it is impossible to do so (unless the "primary supplier" is operating
from a licensed sex establishment in which case he is deemed "fit and
proper" and we would therefore hope he wouldn't entertain such a transaction
in the first place).
However, if the prosecution are correct and the place of supply is the place
of delivery then all the "primary supplier" has to do to in order to supply
the product, knowing that it is to be sold on illegally, is ship it to the
customer's nearest licensed sex shop where the customer would then
physically collect it. Supply has thus deemed to have taken place in a
licensed premises and the authorities can take no action whatsoever against
the "primary supplier". The authorities thus lose what little control they
have.
This really is the crux of the matter and the Video Recordings Act as a
whole. The legislation isn't designed to stop the distribution of R18
material but rather to control it and to ensure that those who wholesale or
deal directly with the public within the UK are deemed fit and proper to do
so and can be held to account by the authorities.
There are many other problems that arise by interpreting the place of supply
as the place of delivery not least of which is the Government enacting
legislation that contains a completely redundant clause. Section 3 of the
Video Recordings Act makes it clear that a "supply outside the United
Kingdom" is not a "supply to the public". If the place of supply is the
place of delivery, and a video is exported then the Video Recordings Act
cannot be applied to that transaction. The supply would fall under the
legislation of the country where the goods were delivered. This of course
assumes that the receiving country has legislation similar to our own.
Indeed it may be the case that the applicable legislation clearly states
that the place of supply in such a transaction is the place of sale in which
case the "primary supplier" cannot be held to account by anyone!
I would not propose at this time to venture into the problems with European
anti-competition law, Human Rights legislation, faulty goods and exchanges
or the role of H M Customs & Excise in allowing foreign companies to send
material into the UK; suffice to say that they all exist and add weight to
the argument that the only sensible conclusion is that the place of supply
in the Video Recordings Act has to be the place of "sale, letting on hire,
exchange or loan".
So what are the implications if the appeal against our convictions fails?
It is certainly the case that any reasonable authority would have to
conclude that a display of any video/DVD or computer game rated above the PG
level, in any kind of retail environment, would constitute an offence under
Section 11 should that display be seen by a minor. It would therefore follow
that unless the major retail chains take steps to prevent anyone under the
age of 18 entering their premises, the only places where you will be allowed
to display an 18 rated video will be a licensed sex shop!
It is also the case that not only would the mail order of R18 material be
deemed unlawful but any promotional material which provides a facility to
order (eg a website, mail order catalogue, or advertisement which can lead
to an off the page order) would also be prohibited. From a publishing point
of view, any publication which carried the alleged "offer to supply" could
potentially face a charge of aiding & abetting in an unlawful offer to
supply. The same would also apply to advertisements for product which
contained no classification certificate.
Greg Hurlstone
Director
Prime Time Promotions (Shifnal) Limited