ROZHDESTVENSKY v NEW ZEALAND POLICE [2023] NZHC 1919

ROZHDESTVENSKY v NEW ZEALAND POLICE [2023] NZHC 1919 [21 July 2023]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECRI-2023-404-132[2023] NZHC 1919BETWEEN ILYA ROZHDESTVENSKYAppellantAND NEW ZEALAND POLICERespondentHearing: 3 July 2023Appearances: D Young for AppellantG Young for RespondentJudgment: 21 July 2023JUDGMENT OF WOOLFORD JThis judgment was delivered by me on Friday, 21 July 2023 at 11:00 am.Registrar/Deputy RegistrarSolicitors: Meredith Connell (Office of the Crown Solicitor), AucklandCounsel: G Young, Auckland[1] At about 12:15 am on 23 July 2021, Ilya Rozhdestvensky drove with excessbreath alcohol on Apollo Drive, Rosedale, Auckland. His breath alcohol reading was600 micrograms of alcohol per litre of breath. In explanation, he stated he hadconsumed some beers, wine, and some gin at his workplace before driving home totake food to his kids.[2] On 2 March 2022, Mr Rozhdestvensky pleaded guilty to one charge of drivingwith excess breath alcohol. He sought a discharge without conviction. On 16 March2023, Judge A M Fitzgibbon declined a discharge.1 Instead, she convicted and finedhim $700 with Court costs of $130 and disqualified him from driving for six months.Mr Rozhdestvensky now appeals against the refusal to grant him a discharge withoutconviction.Approach on appeal[3] An appeal against a refusal to discharge without conviction is an appeal againstboth a conviction and a sentence.2 To the extent this appeal relates to the Court'sweighing of consequences against gravity, it proceeds by way of rehearing wherebythe appellate court makes its own assessment of whether the criteria for dischargewithout conviction are met.3[4] This Court must dismiss Mr Rozhdestvensky's appeal unless it is satisfied thata miscarriage of justice has occurred.4 In the context of a discharge withoutconviction, a miscarriage of justice means a "material error" or that the Judge "erredin applying the principles" for discharging an offender without conviction.District Court decision[5] At the outset, the Judge noted she had read Mr Rozhdestvensky's affidavit, anaffidavit filed by Thomas Furlong, and the affidavits of Adrian Van de Wetering andalso Wes Schwalje, CEO.1 New Zealand Police v Rozhdestvensky [2023] NZDC 5178.2 Jackson v R [2016] NZCA 627; Ovtcharenko v Police [2017] NZCA 65 at [5].3 Austin, Nichols & Co Inc v Stitching Lodestar [2008] 2 NZLR 141; [2007] NZSC 103.4 Criminal Procedure Act 2011, s 232.[6] The Judge then set out the three steps she must consider when dealing with anapplication for a discharge without conviction under s 106 of the Sentencing Act 2002:(a) assess the gravity of the offending;(b) establish the direct and indirect consequences of a conviction; and(c) determine whether the consequences will be out of all proportion to thegravity of the offending.[7] In assessing the gravity of the offending, the Judge noted that drink driving isin general regarded as a moderately serious offence. She then referred to a CADS(Community Alcohol and Drugs Service) programme undertaken byMr Rozhdestvensky and the fact that he had received a previous discharge for similaroffending. The Judge found that the CADS programme undertaken byMr Rozhdestvensky reduced the gravity of the offending to moderate.[8] In terms of direct and indirect consequences of a conviction, the Judgeconsidered that there was an insufficient evidential basis for establishing a real andappreciable risk that Mr Rozhdestvensky's employment would be terminated or hisability to travel for work would be compromised or his company's proposed listing onthe ASX would be affected. The Judge said she was not satisfied there was a real andappreciable risk of any of the alleged consequences occurring.[9] Finally, the Judge had regard to Mr Rozhdestvensky's earlier discharge withoutconviction for a similar offence, which she said counted against him when exercisingher residual discretion to grant him a discharge without conviction.5Appellant's submissions[10] Counsel for Mr Rozhdestvensky advances five grounds of appeal. First,counsel submits that the Judge failed to address the second affidavit byMr Van de Wetering which "confirm[ed] the appellant's [employment] termination5 See Swami v Police [2012] NZHC 2725; [2012] NZFLR 962.upon conviction." Mr Van de Wetering is a director and major shareholder of AirGuard Limited of which Mr Rozhdestvensky is co-CEO. In his first affidavit dated5 August 2022, Mr Van de Wetering states, "if Ilya is not delivering on his currentabilities to lead the company, I will pursue his replacement". In his second affidavitdated 28 October 2022, Mr Van de Wetering explains that the statement he made inhis first affidavit means that should Ilya receive a criminal conviction, "he will bedismissed from his role as Chief Executive Officer for Air Guard". He states that as adirector he has a duty to protect the investment of shareholders and, in particular, toavoid any complications that may interfere with Air Guard's listing on the Australianshare markets or future dealings with foreign clients that require overseas travel.[11] Counsel for Mr Rozhdestvensky seeks leave to file a third affidavit fromMr Van de Wetering dated 29 June 2023. Mr Van de Wetering states:4. Ilya informed me that he has launched an appeal and asked me to defermy decision regarding his dismissal. I don't want to replace MrRozhdestvensky because as a founder of the company – he is extremelyeffective in his role. However, with more travel to come (and some travelswill be covering Middle Eastern Markets like UAE AND Saudi Arabia) Isimply can't afford any risk of the Chief Executive being held up at boarders[sic] or the company being judged based on his personal character.5. As a result Ilya has been given an extension pending the outcome ofhis appeal. This extension will last until the third quarter of 2023 when thecompany launches efforts in the Middle East. In the event his appeal isunsuccessful I will begin an extended search for his replacement.[12] Second, counsel submits that in light of the real and appreciable risk thatMr Rozhdestvensky will lose his employment as CEO of Air Guard Limited, the Judgeerred in deciding that the consequences of a conviction do not outweigh theseriousness of the offence. Air Guard Limited is at a pivotal point in its developmentof innovative technology to combat future viruses like COVID-19. It has received agrant of $500,000 from the Government's COVID-19 Innovation Acceleration Fundfor "adapting, validating and commercialisation of next generation respiratoryprotection to virus protection for healthcare workers". Counsel says thatMr Rozhdestvensky is at the forefront of development, being the head of a companythat has the potential to become a global player in this field using cutting edgetechnology.[13] Third and fourth, counsel submits that the Judge failed to acknowledge andgive weight to the fact that the factual circumstances of the current offence were quitedifferent to that of the earlier offence for which he received a discharge withoutconviction, as were his own personal circumstances. The earlier offence occurredwhen he and his wife had just arrived in New Zealand. His wife was heavily pregnant,and they were struggling with a young family and no support. Mr Rozhdestvenskydrove drunk following a reception after he was asked to judge an advertising eventcontest organised by NZME. Functions of this nature encouraged alcoholconsumption. His application for a discharge without conviction focussed on theeffect of a conviction on an application for residency for him and his family.[14] The current offence arose in the context of Mr Rozhdestvensky's deterioratingphysical and mental stress. He was incredibly stressed due to work meetings and alack of sleep (three – four hours over a period of 48 hours). He had not eaten that day.He is the father of two teenage boys (aged 15 and 17), whose mother died of cancer.He tries to get home at 7:00 pm each night to cook dinner for them, hence his commentto the Police officer who stopped him that he was taking food to his kids.[15] The two offences are quite dissimilar and there was nothing to suggest that thecurrent application should be viewed in light of the earlier application.[16] Fifth, counsel submits that the Judge wrongfully placed emphasis on thepresence of a previous discharge for the same offence when the thrust of the Policeopposition was centred around the gravity of the offending. The Police allowed forthe possibility of discharge even though Mr Rozhdestvensky had received an earlierdischarge. However, the Judge isolated the issue and gave it significant weight, whichit did not merit.Discussion[17] The key issue in this appeal is the establishment of the direct and indirectconsequences of a conviction. With respect to the Judge, she did not articulate anyreasons when she said that she was not satisfied that there was a real and appreciablerisk of any of the claimed consequences occurring, except to say that there was aninsufficient evidential basis for the claimed consequences. Her failure to give reasonsis an error and enables this Court, on appeal, to make its own assessment.[18] Before doing so, I will admit Mr Van de Wetering's third affidavit dated29 June 2023 as fresh evidence. It sets out Mr Rozhdestvensky's work activities overthe past several months and advises the Court that he has been told byMr Rozhdestvensky about the appeal. Mr Van de Wetering advises the Court he willdefer a decision on Mr Rozhdestvensky's employment pending his appeal. If hisappeal is unsuccessful, Mr Van de Wetering says he "will begin an extended search forhis replacement."[19] There are a number of consequences of a conviction identified byMr Rozhdestvensky. First, he says he is currently trying to lead Air Guard Limitedthrough a pre-IPO process with a view to listing on the Australian ASX. The processinvolves rigorous due diligence and requires a criminal record certificate from eachdirector. He says that a conviction would likely stall the pre-IPO process. He attachesan extract from a guidance note on the ASX Listing Rules, which refers to obtaining anational criminal history check for a country other than Australia. Mr Rozhdestvenskydoes not, however, explain how and in what circumstances the pre-IPO process wouldbe stalled if he disclosed a drink driving conviction. Much more information is neededfor a Court to accept this as a realistic consequence of a conviction.[20] Second, Mr Rozhdestvensky says he is genuinely concerned that a convictionwould hamper his ability to travel to a number of overseas countries for businesspurposes, such as Taiwan, Vietnam and Dubai. In the past he has also travelled to theUnited States, Saudi Arabia, Australia, Hong Kong and China. He attached a letterfrom a licensed immigration advisor "detailing the issues [he] will face travelling tothe Middle East". The adviser states, "Mr Rozhdestvensky has asked me to confirmthat, if convicted of the DUI charges, he will face severe restrictions in planning futuretravel to certain Islamic countries for business purposes." The adviser says, however,that he is not an expert in the immigration laws of other countries but that "being aMuslim myself and coming from an Islamic belief background, I can confirm that anumber of Islamic countries prohibit alcohol consumption and therefore any relatedcharges are likely to greatly impair Mr Rozhdestvensky's ability to obtain long and/orshort-term business visas to these countries". Again, more is required for the Court toaccept this as a realistic consequence of a conviction.[21] Third, Mr Rozhdestvensky says he is genuinely concerned that if convicted hewould lose his job with Air Guard Limited. He refers to cl 25.5(d) of his contract ofemployment, which enables his employer to terminate his employment if he isconvicted of a criminal offence. As noted, his fellow director and majorityshareholder, Mr Van de Wetering, has filed three affidavits. Counsel for the Crownsubmits that the statements made by Mr Van de Wetering in his first and secondaffidavits are contradictory and therefore the Court cannot rely on his evidence aboutpossible termination of Mr Rozhdestvensky's employment.[22] I do not see them, however, as contradictory. In his first affidavit,Mr Van de Wetering talks of Mr Rozhdestvensky's ability to find and secure globalopportunities, be at the right place at the right time, and move quickly while inspiringand leading the team in New Zealand. He says Mr Rozhdestvensky will be needed inmany places – Middle East, Taiwan and North America. Mr Van de Wetering alsotalks about the company's future being severely affected through difficulties withcapital raising if Mr Rozhdestvensky "is stained with [a] criminal conviction". It is inthis context that Mr Van de Wetering makes the statement "I need to keep a sharp focuson our future and, if Ilya is not delivering on his current abilities to lead the company,I will pursue his replacement." In other words, if Mr Rozhdestvensky is restricted inhis ability to travel overseas when required or capital raising opportunities are lostbecause background checks reveal his criminal conviction, Mr Rozhdestvensky'semployment would be jeopardised because he "is not delivering on his current abilitiesto lead the company."[23] Mr Van de Wetering makes it clear in his second and third affidavits thatMr Rozhdestvensky's employment as Chief Executive Officer of Air Guard Limitedwould be terminated if he received a criminal conviction.[24] Mr Rozhdestvensky is also the Chief Executive Officer of Rau Bio Limited, abiotechnology company. Thomas Furlong, a director of Rau Bio, has also filed anaffidavit in support of Mr Rozhdestvensky's application for a discharge withoutconviction. Mr Furlong is a partner of IceHouse Ventures, a venture capital firmheadquartered in Auckland. IceHouse Ventures invested in Rau Bio and Mr Furlongultimately joined the board of directors. Mr Furlong believes a conviction would havea long-term impact on Mr Rozhdestvensky and on Rau Bio. Mr Rozhdestvensky'semployment agreement with Rau Bio gives the company the authority to terminate hisemployment upon conviction and, although Mr Furlong does not sayMr Rozhdestvensky's employment would be terminated (as Mr Van de Weteringdoes), he does say that a conviction would require that the board of directors considerwhether to exercise this authority.[25] It sems to me that there is a sound evidential basis for the claimed consequenceof termination of employment as Chief Executive Officer of Air Guard Limited in theform of the three affidavits from Mr Van de Wetering. The question is what weightshould be given to Mr Van de Wetering's fears that the company's business would beaffected in a number of ways by Mr Rozhdestvensky's conviction.[26] As noted above, there is no expert evidence about possible restrictions ontravel. The letter from the licensed immigration adviser dated 21 March 2022acknowledges that he is not an expert in the immigration laws of other countries. Butit seems that Mr Van de Wetering has relied on the letter from the licensed immigrationadviser in forming his own view. The adviser stated:Mr Rozhdestvensky will no doubt face potential visa delays or visa declinesby these countries as he will be required to submit a Certificate of GoodConduct (i.e. no convictions certificate) from New Zealand with any futurevisa application he may wish to file for these countries. This is likely to impacthis business activities such as obtaining and signing joint venture agreements,signing commercial lease agreements and obtaining financial assistance underthe Islamic banking system.[27] A similar opinion is voiced in a character reference for Mr Rozhdestvenskyfrom Mr Wes Schwalje, the Chief Operating Officer at Tasheen Consulting based inDubai, United Arab Emirates. He states:I'm concerned that, if convicted, it will limit his ability to travel to, establishoperations in, and seek investment from potential partners in the Middle East.Character checks are frequently used in the region to screen potential businesspartners, and an operating under the influence conviction verifiable throughpublic record searches could impact his ability to effectively do business inthe Middle East.[28] Whatever the actual consequences on Mr Rozhdestvensky's ability to traveloverseas may be, Mr Van de Wetering has formed the view that it is not a risk he orthe company wants to take. Mr Van de Wetering also refers to his personal experiencein capital raising:In addition to the upcoming company's capital raising opportunities, venturecapital firms will require thorough background checks. I've done it myselfwith all my investments and know this is a norm and standard practice. Istrongly believe that if Ilya is stained with [a] criminal conviction not onlyhimself but the company future will be severely affected.[29] Mr Furlong, in his affidavit, also talks about the long-term impact onMr Rozhdestvensky and on Rau Bio. He states:The company will continue to be engaged in raising more funding andsecuring commercial agreements in the future. It is standard procedure thatpotential investors and commercial parties will conduct due diligence on thecompany and learn about the conviction. As a minimum this will complicatediscussions, but in many situations these parties will simply walk away ratherthan spend the time to understand the circumstances.[30] Mr Van de Wetering concludes in his third affidavit:I simply can't afford any risk of the Chief Executive being held up at bordersor the company being judged on his personal character.It is on this basis that he will terminate Mr Rozhdestvensky's employment as ChiefExecutive Officer.[31] The Crown submits that the Judge's assessment of the evidence, includingMr Van de Wetering's second affidavit, was justified for the following reasons. First,the statement in the second affidavit was not a clarification of the statement in the firstaffidavit. It was a direct contradiction. Second, a mere assertion thatMr Rozhdestvensky would be replaced is an inadequate evidential basis for assessingthe consequences of conviction. Third, there is ambiguity in the evidence.[32] With respect, I am of the view that the situation is tolerably clear.Notwithstanding that others may question the sufficiency of the evidence to establishany restriction on Mr Rozhdestvensky's ability to travel overseas or any adverse effecton company capital raising, they are risks that the majority shareholder in the companydoes not want to take. Mr Rozhdestvensky may also have grounds to challenge hisdismissal, but that is what Mr Van de Wetering has indicated he will do. Myassessment is, therefore, that there is a real and appreciable risk thatMr Rozhdestvensky will lose his job if a conviction is entered against his name.[33] The next stage is to assess the proportionality of the consequences. Will theconsequences be out of all proportion to the gravity of the offending?[34] The Crown submits that, given there was no error in the Judge's assessment ofthe risk of any consequences to Mr Rozhdestvensky's employment, the proportionalityassessment was a straightforward exercise. It further submits that in light of thegravity of the offending, even if Mr Rozhdestvensky was dismissed from hisemployment, the consequences are not out of all proportion to the gravity of theoffence.[35] I disagree. Mr Rozhdestvensky is the co-founder of Air Guard Limited, aninnovative start up venture aimed at changing the way consumers, businesses andsociety at large are protected in the future from airborne viruses and pollutants. It hasreceived a substantial grant from the NZ Government to enable it to commercialisenext generation respiratory protection. Mr Rozhdestvensky himself is seen as wellsuited for the challenging start up technology sector and very effective in pushingforward complex innovation, team leadership and capital raising. Mr Rozhdestvenskywould lose everything he has worked for and the continuing opportunities suchinnovation offers if he was dismissed as co-CEO of the company. That would be outof all proportion to the gravity of the offence. The Judge assessed the gravity of theoffence as moderate. Mr Rozhdestvensky was stopped by Police 200 metres awayfrom his office at around midnight after team drinks. He was stopped because he wasdriving slowly and weaving within his lane on the road.[36] Finally, the Court has to consider its residual discretion as to whether or not togrant a discharge without conviction. The Judge found that Mr Rozhdestvensky'sprevious discharge without conviction counted against him in terms of exercising herdiscretion. However, Courts have on occasions been willing to grant two or moredischarges without conviction to the same offender.66 Swami v Police, above n 5 at [25].[37] In this case, the earlier offence was 16 years ago when Mr Rozhdestvenskywas a recently arrived immigrant with a young family. The present offending tookplace two years ago. Mr Rozhdestvensky has not reoffended subsequently. He hasalso completed a short eight-week CADS Action programme. He is an active memberof the Auckland Hebrew Congregation. He has also applied to do voluntary work forthe hospice where his wife died of cancer, leaving him a solo parent of two teenageboys. He has supplied many references as to his good character. In light ofMr Rozhdestvensky's background and character, I am of the view that the Court'sdiscretion should be exercised in his favour and a discharge without convictiongranted. He is incredibly remorseful.Result[38] The appeal is allowed. Mr Rozhdestvensky's conviction and fine is quashed,and he is discharged without conviction. The disqualification from driving forsix months remains in place.7____________________________Woolford J7 Sentencing Act 2002, s 106(3)(c).