SUN v POLICE [2022] NZHC 1521

SUN v POLICE [2022] NZHC 1521 [29 June 2022]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECRI-2022-404-000152[2022] NZHC 1521BETWEEN YIXUAN SUNAppellantAND NEW ZEALAND POLICERespondentHearing: 27 June 2022Appearances: I M Brookie for AppellantT H Stuart for RespondentJudgment: 29 June 2022JUDGMENT OF HINTON JThis judgment was delivered by me on 29 June 2022 at 3.00 pmpursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarCounsel/Solicitors:I M Brookie, AucklandMeredith Connell (Office of the Crown Solicitor), Auckland[1] Ms Sun was convicted of providing an unregistered financial service1 byJudge P J Sinclair at the Auckland District Court on 14 April 2022 and discharged.The Judge declined to grant a discharge without conviction.[2] Ms Sun now appeals against conviction and sentence on the grounds that adischarge without conviction should have been granted but relying on new evidencewhich she seeks leave to file.Background[3] Ms Sun was investigated as part of Operation Brookings, which targeted amoney laundering syndicate. The syndicate used cryptocurrency trades, informalvalue transfer services and the purchase of high value assets to conceal the proceedsof criminal offending. A man named Mr Lu is said to have run the syndicate andMs Sun was in a romantic relationship with him at the time of her offending.[4] Sometime in April or May 2020, Mr Lu offered Ms Sun a commission if shecould find individuals willing to exchange New Zealand dollars forChinese Renminbi. She advertised this service on WeChat (a social mediaapplication). Subsequently on 7 May 2020 an individual answered the advertisement.Ms Sun organised for this person to meet with Mr Lu to exchange RMB 50,000 forNZD 10,000 in cash. This exchange was carried out between Mr Lu and the individualon 8 May 2020.District Court decision[5] Judge Sinclair first assessed the seriousness of the offending. The offenceitself did "not sit at the high end of the criminal justice scale".2 However, the Judgedid take into account the strong public interest in ensuring strict compliance withfinancial markets legislation and the fact that the interest is even stronger for thosewho work in the financial accounting sector, as Ms Sun does.1 Financial Service Providers (Registration and Dispute Resolution) Act 2008, s 11(2). Maximumpenalty: one year's imprisonment or $100,000 fine.2 R v Sun [2022] NZDC 6876 at [6].[6] Judge Sinclair considered that Ms Sun had a limited role as a "middle person"and the offending was unsophisticated.3 The Judge also noted Ms Sun's previous goodcharacter, remorse, and low risk of reoffending. She took into account Ms Sun's fullcooperation with police and her agreement with the Crown to testify against Mr Lu.Ms Sun also made an early guilty plea. The pre-sentence report writer noted thatMs Sun was remorseful, had no rehabilitative needs and a low risk of reoffending.[7] Therefore Judge Sinclair found that the overall gravity of the offending was atthe "lower end of the spectrum".4[8] The Judge then turned to the direct and indirect consequences of a conviction.Ms Sun is a management (non-chartered) accountant with an Auckland-basedconstruction company. First, the Judge found that a conviction would not jeopardiseher employment at her current firm based on the evidence of her manager, Mr Guo.[9] Second, the Judge considered whether the conviction would prevent Ms Sunfrom fulfilling her aspiration to become a chartered accountant. Referring to Singh vPolice, she noted Chartered Accountants Australia and New Zealand (CA ANZ)5should be aware of Ms Sun's offending if she were making a membership applicationto it.6 She further concluded that the conviction would not necessarily precludeMs Sun from becoming a chartered accountant given her particular circumstances,again referencing Singh.[10] Third, the Judge held that the conviction would not prevent Ms Sun fromgaining other employment in the finance industry because employers could lookbehind the conviction especially where the penalty has been minimal, noting thatMs Sun's current employer was willing to continue to employ her.[11] Balancing the two limbs of the test, the Judge concluded as follows:3 At [8].4 At [13].5 The New Zealand Institute of Chartered Accountants (NZICA) was succeeded by CharteredAccountants Australia and New Zealand in 2014.6 Singh v Police HC Auckland CRI-2012-404-000420, 11 April 2013.[29] I conclude a conviction would not undermine your currentemployment or your future ability to obtain other jobs. It may possiblynegatively affect your career progression and application to be a charteredaccountant, but you would not be barred from applying to be a charteredaccountant by reason of a conviction and the institute should not be deprivedof information that is highly relevant to that determination.[30] So, the application for a discharge without conviction is declined.[12] The Judge then convicted and discharged Ms Sun.The appeal[13] Mr Brookie submits that had Judge Sinclair known (which Ms Sun herself didnot) that Ms Sun would lose her employment following conviction, the test unders 107 of the Sentencing Act 2002 would have been met.[14] Mr Brookie says that Mr Guo had been under a mistaken understanding that aconviction under the Financial Service Providers (Registration and DisputeResolution) Act 2008 (the Act) would not constitute a "criminal record" for Ms Sun.Following Ms Sun's conviction, Mr Guo advised her that he had spoken to the Boardand shareholders of the company, who said that because Ms Sun now had a criminalrecord, she would not be able to continue working there. Her hours have been reducedfrom 40 per week to just eight, and her employment will be terminated by21 October 2022. Mr Guo and Mr Brookie confirmed that if the appeal is successfulMs Sun will retain her employment. Mr Brookie submits that this change incircumstances significantly increases the seriousness of the consequences.[15] Second, Mr Brookie submits that even putting aside the change in events, theDistrict Court erred in its evaluation of the consequences of conviction to Ms Sun onher career in general. The consequences should properly have outweighed the lowgravity of the offending. The gravity of offending was extremely low, as reflected inthe ultimate sentence of conviction and discharge. The Judge erred when she statedthat prospective employers were "capable" of looking past the conviction because thetest is whether there is a real and appreciable risk that Ms Sun will be hired becauseof her conviction. This requires that future employers do in fact look past theconviction. Mr Brookie submits instead they will get the impression that the offendingrelated to her present job when it did not, and refuse any application at face value.[16] For the Crown, Mr Stuart reiterates the public interest in compliance withfinancial markets legislation. He submits the consequences, even as presented by thefresh evidence, are not out of all proportion to the offending. Ms Sun can find anothersimilar job and has not presented evidence that she has been rejected from similarroles. He says the Judge was right to conclude that CA ANZ would be able to makeits own decision based on all of the available facts, including relevant mitigatingfactors, with regard to any application Ms Sun might make to become a charteredaccountant.Law[17] An appeal against a refusal to grant a discharge without conviction is both anappeal against conviction and sentence.7 The appellate court must make its ownassessment of an application's merits.8 However, the appellant must show there hasbeen a "material error" leading to a miscarriage of justice.[18] Section 106 of the Sentencing Act 2002 gives the Court discretion to dischargewithout conviction. It is subject to the s 107 test:The court must not discharge an offender without conviction unless the courtis satisfied that the direct and indirect consequences of a conviction would beout of all proportion to the gravity of the offence.[19] Three factors must therefore be considered: (a) the gravity of the offence; (b)the direct and indirect consequences of a conviction; and (c) whether thoseconsequences are out of all proportion to the gravity of the offence.9 The assessmentof the first factor is influenced by aggravating and mitigating factors that apply to theoffender. There must be a "real and appreciable risk" of the consequences in thesecond factor occurring.10[20] Section 11 of the Act, under which Ms Sun was convicted, provides that allfinancial service providers must be registered and that they must be part of a disputeresolution scheme. It is an offence to knowingly breach these requirements.7 Jackson v R [2016] NZCA 627, (2016) 28 CRNZ 144 at [7]–[8].8 Austin, Nichols & Co Inc v Stitching Lodestar [2007] NZSC 103; [2008] 2 NZLR 141.9 R v Hughes [2008] NZCA 546, [2009] 3 NZLR 222 at [8].10 DC (CA47/2013) v R [2013] NZCA 255 at [43].DiscussionFresh evidence[21] Ms Sun seeks to adduce new evidence on appeal. This evidence consists ofher own affidavit dated 17 May 2022 and an affidavit of Mr Guo dated 17 May 2022.These two affidavits outline the change in circumstances since the District Courtdecision, namely that as a result of the conviction Ms Sun will no longer be able toretain her employment. The Crown accepts that the affidavit of Mr Guo is freshevidence, appropriately admissible on appeal.[22] The test for admitting evidence on appeal is whether the evidence is fresh andcredible, and whether overall it is in the interests of justice for it to be admitted.11 Iam satisfied the affidavits of Ms Sun and Mr Guo are fresh because they canvassmatters that had not arisen at the time of the District Court hearing, and that show amisunderstanding on Mr Guo's part at that earlier time. I am also satisfied it is in theinterests of justice that they be admitted because the change in circumstances formsthe basis of Ms Sun's appeal.[23] Ms Sun also seeks to adduce an affidavit from Ms Man dated 26 May 2022.Ms Man works as a financial accountant and is involved in hiring people to her team.Her affidavit relates to Ms Sun's employability in the accounting industry generallywith reference to her position that she would not hire someone with a conviction suchas Ms Sun's. The Crown opposes the application to admit the affidavit of Ms Man insupport of this appeal. This is evidence that could have been adduced at trial wherethe issue of employability generally was at issue. I note that the Crown questions thecredibility of the affidavit given Ms Man knows Ms Sun personally to some degree.In any event Ms Sun's potential difficulties in obtaining further employment are clearon the face of what has happened to her current employment. Further the observationthat Ms Sun would struggle to get another job in accounts with such a conviction iscontained in the affidavit of Mr Guo dated 17 May 2022. Apart from not being freshevidence, Ms Man's affidavit is unnecessary in that regard. It is inadmissible.11 R v Bain [2004] 1 NZLR 638 (CA) at [22]–[27], affirmed on appeal in Bain v R [2007] UKPC 33,(2007) 23 CRNZ 71 at [34].Discharge without conviction[24] The judgment of Judge Sinclair was considered and well-reasoned. I agreewith it entirely on the evidence then before the Judge.[25] The fact Ms Sun would keep her job was clearly material to the Judge'sdecision. That fact has proven to be incorrect. Mr Guo is a 50 per cent shareholder inMs Sun's employer and is her manager. His affidavit sets out that he did not originallyrealise a conviction under the Act amounted to having a "criminal record". Onceinformed that was the case, Mr Guo had to inform the other shareholder who made itclear that in terms of company policy the Board would not tolerate an employee witha criminal record. Ms Sun's hours at the company have been reduced to eight hoursper week and her employment will be terminated on 21 October 2022. Mr Guoconfirms that if Ms Sun is not convicted, she will retain her employment.[26] By no fault of the Judge, the judgment now contains a material error of factdue to the change in circumstances. I record some scepticism surrounding the "phase-out" employment dismissal. It seems odd that the company could not employ someonewith a criminal record, yet Ms Sun remains on reduced hours until October.Mr Brookie said he had queried that with Ms Sun and understood this was a "softlanding" approach. That also makes little sense as suddenly reducing a valuedemployee to no more than eight hours per week is hardly a "soft landing". However,although Mr Stuart adopted my concerns in his oral submissions, in writtensubmissions the Crown did not suggest any irregularity in Mr Guo's evidence and theyaccepted the evidence could be admitted without requiring Mr Guo for cross-examination. Therefore, taking the evidence at face value, Ms Sun has now effectivelylost her job. If this evidence had been before Judge Sinclair, based on a careful readingof her judgment, I consider her assessment would have favoured discharge withoutconviction. For the same reasons, I also accept that if an already trusted employeeloses employment in the career for which she has trained (in China and New Zealand),then she would similarly struggle to obtain any equivalent employment elsewhere.[27] I am not persuaded by the submission that a discharge without convictionshould be granted on the basis that Ms Sun would struggle to become a charteredaccountant if a conviction were entered. In my view that counts against Ms Sun'sappeal. I reiterate the comment of Judge Sinclair that "it is important and appropriatethat CA ANZ are aware of your offending".12 I am concerned that if I were to grantthe discharge without conviction, CA ANZ would not be aware of Ms Sun's actions.For that reason, and with the consent of Ms Sun, I am ordering that a copy ofJudge Sinclair's judgment and this judgment be sent by Mr Stuart to CA ANZ as soonas practicable with a covering letter explaining that the judgments have been providedso they are aware of the charge and reasons for the discharge should Ms Sun apply formembership in the future. I also impose a condition on Ms Sun to provide thesejudgments to CA ANZ as part of any application by her.[28] With that concern abated I am satisfied that the consequences of convictionwould be out of all proportion to Ms Sun's offending, and I grant a discharge withoutconviction.Order[29] I make orders in terms of [27] above.Result[30] The appeal is allowed.[31] The discharge without conviction is entered.[32] Ms Sun's conviction is quashed.___________________Hinton J12 R v Sun, above n 2, at [23].Addendum[33] I am concerned, having read Ms Sun's interview in relation to her proposedevidence against Mr Lu, that she was at best very gullible in her dealings with her thenboyfriend and perhaps over-impressed by his apparent wealth. I accept that, as theinterview relates to Mr Lu's wider dealings and only to a very minor degree to thetransaction with which Ms Sun is charged, the transcript is not relevant. But Ms Sunneeds to choose her friends much more scrupulously in future. She cannot afford tobe closely associated again with someone facing charges such as Mr Lu is in thismatter.