R v Lowther

[2023] NZHC 3515

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CRI-2022-004-001470

[2023] NZHC 3515

THE KING

v

MARK ANDREW LOWTHER

Hearing:

5 December 2023 and 14 December 2023

Appearances:

E T Fletcher and N E Wilgar for Crown (05.12.23) N Walker for Crown (14.12.23)

T Clee for Defendant (by VMR)

Judgment:

5 December 2023

Reissued:

14 December 2023

SENTENCING NOTES OF VENNING J

Solicitors/Counsel:

Kayes Fletcher Walker Ltd, Manukau T Clee, Auckland

R v LOWTHER [2023] NZHC 3515 [14 December 2023]

[1]    Mark Lowther you appear for sentence today having pleaded guilty to a charge of money laundering. A conviction has not yet been entered because Mr Clee has indicated you would be applying for a discharge without conviction. You have now filed the application for discharge without conviction which is supported by affidavit evidence and other materials.

[2]    So the Court must first deal with that application for discharge without conviction before considering any sentence that would be imposed on you if the application is unsuccessful.

[3]    The application for discharge is governed by s 106 of the Sentencing Act 2002 which provides:

If a person who is charged with an offence is found guilty or pleads guilty, the court may discharge the offender without conviction, unless by any enactment applicable to the offence the court is required to impose a minimum sentence.

[4]    Section 107 provides guidance for the Court in considering whether to discharge someone such as you without conviction:

The court must not discharge an offender without conviction unless the court is satisfied that the direct and indirect consequences of a conviction would be out of all proportion to the gravity of the offence.

[5]    In R v Hughes and Z v R the Court of Appeal confirmed this Court is required to consider three issues.1 First, it must assess the gravity of the offending having regard to the facts of the particular case. At this stage factors personal to you may also be relevant. Next, the Court must identify the direct and indirect consequences of a conviction, and finally, the Court must determine whether the consequences of conviction would be out of all proportion to the gravity of the offending. There is a residual discretion not to grant a discharge but that is rarely exercised if the statutory criteria are met.

[6]    So the first issue is the gravity of the offending. Mr Lowther, your offending relates to one charge in which you are jointly charged with Daniel Hannett and Warwick Wong. The offending is connected to a major drug importation and supply

1      R v Hughes [2008] NZCA 546; and Z v R [2012] NZCA 559.

operation. The Police investigation focused on Mr Hannett, who became the subject of a number of surveillance device warrants issued by this Court. Mr Hannett is a director and shareholder of several companies. He also has gang affiliations. During the time Mr Hannett was under surveillance he owned three properties, 22 luxury vehicles and other valuable property, including art works. In total he had assets worth approximately $12 million, although he had no apparent legitimate sources of income.

[7]    In 2020 and 2022, Mr Hannett was involved in two money laundering transactions, and it is the first of those that you were involved in. Between 1 January 2020 and 11 August 2020 Mr Hannett, you and Mr Wong, were involved in the sale and purchase of a property Mr Hannett owned at a greatly inflated price in order to conceal the source of the $5 million in cash.

[8]    At the time you were a close associate of Mr Hannett. Your communications were also intercepted by the Police and it is clear from those that you were a conduit between Mr Hannett and Mr Wong in facilitating the money laundering transaction. Mr Wong is himself part of an established money laundering syndicate. He received the $5 million in cash and returned it to Mr Hannett as the purchase price of the property owned by Mr Hannett.

[9]    This was achieved in the following way. On 3 October 2019, Mr Hannett purchased a property at Clayden Road, Warkworth through his company Genesis for

$1,100,000. In order to conceal approximately $5 million of cash, Mr Hannett (or someone on his behalf) reached out to the established money laundering syndicate of which Mr Wong was a member.

[10]   In early 2020, Mr Wong met with you and other associates of Mr Hannett. You instructed Mr Wong to collect the $5 million from an address on the North Shore. Once the money was collected he was told he would receive assistance to move it into his company bank account. The money was packed in sealed bags within 12 gym bags. Over the course of the next few months a further syndicate member came to Mr Wong’s address every two to three days and collected portions of the $5 million. Approximately  600  deposits  were  made  into  Mr Wong’s  bank  accounts, totalling

$4.8 million approximately, through various means including via foreign exchange

remitters and a third party facilitating online bank transfers. Mr Wong, and a senior member of his syndicate, each received $80,000 as payment for their services.

[11]   On 11 August 2020, Mr Hannett sold his property at Clayden Road, Warkworth to Mr Wong’s company Horizon for $5 million. That of course was $3.9 million more than he had paid for it some 10 months earlier. The purpose was plainly to conceal or disguise the source of the $5 million in cash which had been derived from drug offending. The understanding was the property still in fact belonged to Mr Hannett and after a period of time the title would be transferred back to him or the property sold and its proceeds returned to Mr Hannett. There were tenants in the property who remained there. They did not pay any rent to Mr Wong and when they raised an issue about the property he directed them to Mr Hannett.

[12]   Between June and August 2021 and then between September and December 2021, Mr Wong listed the Clayden Road property for sale on TradeMe. He did so following meetings and phone calls with you. In one call in July 2021, Mr Wong told you he was attempting to make any sale look legitimate to “fall under the radar” because he said “lately … [Police are] catching everybody”. Mr Wong told you that if he had any updates he would let you know.

[13]   Towards the end of 2021, Mr Hannett became impatient about the delay in selling the property, and both you and he began to pressure Mr Wong about it. A meeting was arranged. You and Mr Hannett met with Mr Wong and two other associates were brought to the meeting to intimidate Mr Wong.

[14]   Ultimately the property was sold for $1,605,000. It was due for settlement on 28 January 2022. Mr Hannett told you upon settlement he would give Mr Wong a bank account to transfer the money into. On 27 January 2022, Mr Hannett told you Mr Wong had potentially incriminated him by sending emails in relation to the sale. He told you he wanted the money but if Mr Wong transferred the money from a New Zealand bank account it could be traced. Shortly after settlement Mr Hannett told Mr Wong he was nervous and told Mr Wong he would give you the details of a bank account in Malaysia for him to transfer the sale proceeds to. On 4 February 2022, Mr Wong attempted to transfer just over a million dollars to the bank account of a

Malaysian law firm. The transaction failed because incorrect details were used. The amount was ultimately returned to Mr Wong’s bank account and was able to be restrained by Police.

[15]   Mr Clee has submitted your involvement in the transaction I have detailed was limited. The principal offenders were Mr Hammett and Mr Wong. Mr Clee has emphasised you have no previous convictions and at the time of your offending you were in your early twenties. He also emphasised you did not participate in the drug offending which sourced the money and it is not alleged you handled any of the physical cash. There is no direct evidence that you profited or were paid in any way.

[16]   Mr Clee also noted you have no previous convictions. There is a suggestion you were perhaps dealing with addiction issues related to prescription medicine and were also suffering from anxiety at the time. He submitted your offending was driven in part by your naivety. He also of course noted you pleaded guilty at an early stage.

[17]   Mr Clee also referred to cases where money mules and other people have been involved in money laundering but were discharged with conviction.2 I consider those cases however to be quite different from yours. He also made the point that in other cases the defendant has handled the cash.

[18]   Mr Lowther, even taking account of your personal factors and the limited extent of your involvement, I consider the offending in relation to this charge falls in the medium to serious bracket. Without your personal factors it would fall towards the higher end of serious money laundering offending. The amount of money involved was significant. While there is no evidence you received any money for your assistance, you were involved in a sophisticated scheme to launder that $5 million, the proceeds of drug offending. You acted as a conduit. You were involved in the offending in an ongoing basis and assisted Mr Hannett over an extended period of time to implement the laundering. Your offending enabled Mr Hannett to launder the $5 million proceeds of crime. Having taking account of your personal circumstances I assess the gravity overall as medium to serious.

2      Police v Kamboj [2019] NZHC 2652.

Consequences of convictions

[19]   The most direct consequence of a conviction is said to be that it would prevent you from obtaining a leadership or ownership role in your chosen field of work. Such work requires financing facilities that are likely to be unavailable to you personally or any company you are involved in due to the strict anti-money laundering compliance laws.

[20]   In addition to your affidavit, there are two supporting affidavits from Mr Hooper, and from Mr Jamison.

[21]   It is clear from your evidence and counsel’s submissions that you have an entrepreneurial bent. You have been involved in a number of business ventures. The current one is Surface NZ Ltd, which is a painting, decorating and finishing company. You took on a partner, Mr Jamison and once charged with the money laundering offending you gave up your shares and directorship in Surface NZ Ltd and its holding company. Those companies are successful and appear to be in part dependent on your entrepreneurial skills in terms of engaging clients and selling the product.

[22]   Mr Hooper is the accountant for Surface NZ Ltd. He has previous experience as a bank manager. He says that the civil construction industry requires finance facilities. Having a company director or even a shareholder with a money laundering conviction risks an investigation which could lead to bank accounts being frozen. On that basis he considers there is a significant risk that you will be excluded from leadership and control of your career as a director or shareholder in that industry.

[23]   Mr Jamison, your business partner, has expressed concern for his liability and reputation if you are convicted. He is the director of Unlocked Holding Ltd which holds the shares of Surface NZ Ltd. He is the sole shareholder and is therefore the beneficial owner of Surface NZ Ltd. Mr Hooper confirms that you are now only an employee.

[24]   Mr Clee also referred to the fact that you have responsibility for your brother, who has health issues.

[25]   All convictions have some adverse effect on employment prospects but the Court accepts that this is a consequence which is consistent with the deterrent function of convictions.3

[26]As the Court of Appeal noted in R v Taulapapa:4

Conviction carries a social stigma which the law sustains by recording and publishing convictions. It may affect a person's career, but that consequence must normally yield to the employer's right to know. This principle extends to independent bodies charged with assessing the character or suitability for a particular career. It applies to all offenders for whom convictions are recorded, including the young.

[27]   The evidence before the Court is that at the moment you could not hold a position as a director or shareholder of a company but you are employed by the company that you have been responsible for creating. It appears from the evidence that you are essential to that business and would have security of employment.

[28]I assess the impact of a conviction on you as moderate.

[29]   Considering the clear wording of s 107 I do not consider it can be said the impact of a conviction to be out of all proportion to the seriousness of the offending.5

[30]For those reasons the application for discharge without conviction is dismissed.

[31]   I turn now to your appropriate sentence. The Crown argues for a starting point of five to six years’ imprisonment having regard to cases of  Zhang v R;   R v Le;     R v Naufahu; Naufahu v R; R v Daniels & Simpson; R v Fonua; and R v N.6 The Crown accepts you would be entitled to a reduction of up to 25 per cent for your guilty plea and a discount for your lack of previous convictions.

3      Blay v New Zealand Police [2014] NZHC 2929.

4      R v Taulapapa [2018] NZCA 414 at [42](a) (footnote omitted).

5      Smyth v R [2017] NZCA 530.

6      Zhang v R [2010] NZCA 481; R v Le [2018] NZHC 2199; R v Naufahu [2021] NZHC 217, Naufahu v R [2021] NZCA 508; R v Daniels & Simpson [2020] NZHC 275; R v Fonua [2020] NZHC 3107; and R v N [2020] NZHC 3256.

[32]   Mr Clee submits that having regard to the cases of R v Amani, R v Khan and R v Williams,7 amongst others, that the starting point for sentence should be lower than the starting point that Peters J took in Khan of two years, six months.

[33]   In sentencing you the Court is required to have regard to the purposes and principles of sentencing from the Sentencing Act. In particular, the purposes are to hold you accountable for the harm done to the community by offending of this nature, which assists and facilitates other criminal offending, particularly drug dealing; to promote in you a sense of responsibility for and acknowledgement of that harm; to denounce your conduct and to deter you and others from committing similar offending. The Court is also required to consider your rehabilitation and reintegration.

[34]   The principles the Court must take into account that are particularly relevant in this case are the general desirability of consistency with sentencing levels in respect of similar offenders and similar offences. The Court is also directed to impose the least restrictive outcome appropriate in the circumstances.

[35]In relation to the laundering of drug money the Court of Appeal in R v Wallace

said:8

… those who launder money for drug dealers are nearly as culpable as those who actually participate in the dealing. They help the dealers avoid detection and in this way provide assistance in their activity. Depending upon the circumstances, they may not technically be parties to the principal crimes, and hence the need for a separate offence on the statute book, but they come very close to it. Sentences for money laundering should therefore bear a relationship to sentences for the particular principal offending and should be approached on a similar basis. The more serious the principal offending, the more serious the laundering.

[36]   Mr Fletcher supported the Crown submission for a starting point of five to six years by reference to Zhang v R,9 and in particular Williams v R which reaffirmed the above approach in a further passage:10

7      R v Amani [2020] NZHC 3260; R v Khan [2018] NZHC 3065 and R v Williams [2018] NZHC 2731

8      R v Wallace CA415/98 16 December 1998 at 8–9.

9      Zhang v R, above n 6.

10     Williams v R [2021] NZCA 333 at [18].

These observations retain general validity. The manufacturer, the dealer and the treasurer are all involved in the overall criminal enterprise. However, it is always necessary to focus on the offender's role in drug offending and allowances must be made for the differences in the maximum sentences. We accept Mr Ewen's submission that some care may be needed when considering sentencing decisions for money laundering that predate the revised sentencing guidelines set out in Zhang. Some methamphetamine offending now attracts lower starting points than was formerly the case.

[37]   In the present case the particularly relevant factors are the significant sum of money involved, $5 million, and the source of the money, namely serious class A drug offending. The transaction was itself relatively complex. It involved a sham sale and I consider you performed an important role in the transaction as you were a key intermediary between Mr Hannett and Mr Wong. As the Crown submit, you participated in planning meetings and instructed Mr Wong. Your involvement in the transaction was ongoing over a lengthy period of time. You communicated with Mr Wong in an attempt to effectively distance Mr Hannett from his involvement.

[38]   While I agree with the Crown that your offending in this case is serious, for the reasons given by Mr Clee, I accept your personal culpability is to a notable degree less than that of Mr Hannett or Mr Wong. Having regard to the authorities and the purposes and principles of the Act in my assessment the appropriate starting point for your offending in this case is three years, three months. I would uplift that by one month for the other offence of failing to comply with your obligations in relation to the computer system search which would lead to an adjusted start of three years, four months.

[39]   I turn to your mitigating factors. I take into account your early guilty plea, for which the Crown acknowledges you are entitled to 25 per cent. The fact you have no previous convictions is worthwhile and I allow 10 per cent for that. I also take into account your other personal circumstances, including your health addiction issues and the responsibilities in relation to your brother and the steps you appear to be taking to turn your life around and distance yourself from people like Mr Hannett. Taking account of those issues and the limitations you will suffer in relation to your employment, at least for a period, I allow a further seven and a half per cent.

[40]   That leads to a total reduction in your sentence of 42½ per cent, which leads to an end sentence of 23 months’ imprisonment.

[41]   At that level you are eligible to be considered for home detention. Mr Clee has suggested the possibility of community detention or community work but I do not consider anything less than home detention to be appropriate in this case in order to meet the purposes of accountability, denunciation and deterrence.

[42]   I am satisfied that in this case, given your circumstances, the scope for rehabilitation and that I am confident you will not be back before this Court again, that home detention is the appropriate sentence for you.

[43]   The difficulty for the Court today is that there is no report providing for home detention at the proposed address. I do not want to have to send you to imprisonment for a short term while that detail is sorted out. I remand you to 38 Georgina Street, Freemans Bay on bail to 9.00 am, next Thursday, 14 December 2023, and I ask Registry to ask the Corrections Department or the EM bail assessor to immediately take steps to assess that address and Mr Jamison for suitability. I indicate that provided the address and Mr Jamison are suitable then at 9.00 o’clock next Thursday, 14 December the sentence I will impose is a sentence of home detention for 12 months.

[44]You may stand down until then.

Venning J

ADDENDUM – 14 December 2023

[45]   Mr Lowther your sentence was adjourned to enable Corrections to check the suitability of the proposed address at 38 Georgina Street, Freemans Bay, and its occupier for the possible sentence of home detention that the Court had indicated.

[46]   I now have a report confirming the suitability of the address and the occupant so on the charges that the Registrar has referred to you are sentenced to home detention for 12 months at that address. I note that in my sentencing notes I referred to a sentence of imprisonment of 23 months to be converted to home detention. Given the serious nature of this offending I am satisfied that the maximum term of home detention of 12 months is appropriate.

[47]   In addition to the sentence of home detention there will be the special conditions attached to the pre-sentence report relating to home detention itself at that address and there will be standard post-release conditions.

[48]   Mr Lowther the offending that you were involved in would normally have required a sentence of imprisonment. You have avoided that because you are a young man and you have no previous convictions and the Court sees a future for you so that you never need to be back before this Court again. So this is a one-off chance for you. Please, in your own interests, do not waste it because if you appear again the outcome will be very different. That’s all, you may stand down.

Venning J