R v Rakich

[2014] NZHC 3287

ORDER THAT NO PERSON IS TO HAVE ACCESS TO THE COURT FILE ON THIS MATTER WITHOUT FIRST OBTAINING LEAVE OF A JUDGE OF THIS COURT

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI-2014-090-001097

CRI-2014-004-008151 [2014] NZHC 3287

THE QUEEN

v

JOSEF BRIAN RAKICH
and

MICHAEL REEVES

Hearing:

21, 30 and 31 October, 25 November and

11 and 12 December 2014

Counsel:

A J Pollett and S R Jacobs for the Crown A D Couchman for the Prisoner, Rakich J I S Kovacevich for the Prisoner, Reeves

Sentence:

12 December 2014

SENTENCE OF DUFFY J

Counsel:     A D Couchman, Auckland

J I S Kovacevich, Auckland

Solicitors:    Meredith Connell, Auckland

R v RAKICH and REEVES [2014] NZHC 3287 [12 December 2014]

[1]Mr Reeves, you appear for sentence today having pleaded guilty to:

(a)One representative charge under s 6(1)(e) of the Misuse of Drugs Act 1975 (the Act) of selling class C drugs;

(b)One representative charge under s 6(2A)(c) of the Act of conspiring to sell class C drugs; and

(c)One representative charge under s 6(1)(b) of producing class C drugs.

[2]Mr Rakich, you appear for sentence today having pleaded guilty to:

(a)One representative charge under s 6(1)(e) of the Act of selling class C drugs; and

(b)One representative charge under s 6(2A)(c) of the Act of conspiring to sell class C drugs.

[3]        The class C drugs involved in this offending were the drugs 1- benzylpiperazine or A2 benzylpiperazine or N-benzylpiperazine (1-benzyl-1,4- diazacyclohexane) (“BZP”), 1-(3-trifluoromethylphenyl)piperazine or N-(3 - trifluoromethylphenyl)piperazine) (“TFMPP”), Methedrone and MDPV. As these drugs are sold in tablet form, I shall refer to them collectively as the “class C tablets”.

[4]        These drugs are sold on the street as ecstasy, even though they are not the drug MDMA, which is an acronym for the chemical name for ecstasy. Further, the drug MDMA is classified as a class B drug under the Act, whereas the drugs involved in this offending are not; they are class C.

[5]        Now your counsel may have explained to both of you that as I work through the sentencing process, I have to adopt what is called a starting point, and the starting point for offending of this nature is a term of imprisonment. The fact that I adopt that starting point does not mean that there will be a term of imprisonment. It is just the foundation on which I build the ultimate sentence.

[6]I also indicate at the outset – this is particularly important for you, Mr Reeves

– that I am of the view that certainly for neither of you, there should be a sentence of imprisonment, and I propose to have enquiries made as to whether the address of your parents is a suitable address from which you could serve a sentence of home detention. If it is, that will be the sentence. If it is not, and there is no suitable address, I will be left with no alternative but to send you to prison, but in that case, I would make an order that you would have leave to apply for a sentence of home detention as soon as you could find an address that is suitable from which you could serve a home detention sentence.

[7]        I propose to deal with the sentencing of you, Mr Reeves, first. Then I will deal with Mr Rakich and the application for a discharge without conviction.

Facts

[8]        In terms of the facts of the offending, both of you were involved with other co- offenders in an operation that produced and supplied the class C tablets. The police say that these types of tablets predominately sell for approximately $40 per tablet if bought individually, or less if bought in bulk.

[9]        Between 29 May 2011 and 27 September 2011, the police obtained call-data warrants for your cellphone, Mr Reeves, and two of the co-offenders. This information revealed that in relation to you, Mr Reeves, you sold at least 9,148 class C tablets over different occasions between 29 May 2011 and 13 October 2011. On three separate occasions, you conspired to sell a total of at least 300 class C tablets. You sold the class C tablets for between $19 and $25 each. You were the person who initially sourced these tablets from a supplier, and you then passed them on to those involved in this operation. However, you fell out with the supplier, and after that, you took on a lesser role in the operation. A co-offender, Mr Dodd, took over the sourcing role, and you on-sold the class C tablets to friends and associates.

[10]      You also produced the drug, Methedrone, which is commonly known as “party pills”, on at least one occasion. The home address of your co-offender, Mr Reid, was searched and a pill press machine was found with traces of the class C drug

Methedrone. Mr Reid admitted to using the pill press to produce what he called “party pills”, the last such occasion being when you, Mr Reeves, were present and assisted with the production.

[11]      When your home address was searched, the police located packages containing the class C drug, Methedrone.

[12]      Mr Rakich, you bought class C tablets from Mr Dodd. You then on-sold these tablets to associates and friends for a profit. On three occasions between 10 October 2011 and 31 October 2011, you sold at least 200 class C tablets. These pills sold for

$20 to $25 each. On seven separate occasions between 19 July 2011 and 3 November 2011, you conspired to sell a total of at least 2,600 such tablets, though I note your counsel’s submissions that in relation to you, the offending is in the month of October 2011.

Personal circumstances

Mr Reeves

[13]      In terms of personal circumstances, Mr Reeves, you are 25 years of age. You were aged 21 to 23 years at the time of the offending. You have a limited criminal history relating to traffic offending and a breach of community work. These offences are not related to the current offending. I will not be taking them into account.

[14]      In the pre-sentence report, you confirmed that whilst your parents were initially shocked by your offending, they are now supportive of you. You have advised that you no longer associate with your co-offenders. You have admitted to using methamphetamine from the age of 21, which coincides with when you started dealing in drugs. You exhibited binge drinking behaviour at that time. However, you have abstained from illicit drug use for the past 16 months, and you have not consumed alcohol for the past 13 months. I also note, as was said by your counsel today, that you have recently participated in rehabilitation programmes with the Community Alcohol and Drug Services. That was an eight week introductory course and then you also later completed an intensive course of nine hours per day for 12 weeks.

[15]      You are a bricklayer by trade. You are currently in full-time employment and work long hours. I understand your employer is willing to support you, should you receive a sentence of home detention.

[16]      You have expressed regret and remorse for your actions. You told the pre- sentence report writer that the arrest was the “wake up call” you needed and that since the arrest, you have turned your life around. You advised the pre-sentence report writer that you offended partly through the influence of others and partly because it was “easy money”.

[17]      Your father has advised the pre-sentence report writer that he considers that you are unlikely to return to drug-related offending. He also told the pre-sentence report writer that since your arrest, you have become more focused on being a father to your young son.

[18]      You have satisfactorily completed, as I said, the community drug and alcohol programme that you took on your own initiative, and you have said that you have no desire to return to drug use.

[19]      The pre-sentence report writer has assessed your risk of reoffending and the risk of harm to others as low. She recommended a sentence of home detention.

Mr Rakich

[20]      Mr Rakich, you are 23 years of age, and you were 20 years of age at the time of the offending.

[21]You are a first-time offender.

[22]      You reside with your parents. Your family are supportive of you. You are a qualified personal trainer with your own business that you started in late 2011. You advised the pre-sentence report writer that you used to consume party pills about once a month for social events. Since your arrest, you have self-referred yourself to a one day intensive alcohol and drug programme.

[23]      You told the pre-sentence report writer that you were drawn into the offending through meeting associates at the gym where you worked. You then began selling the class C tablets to your friends. You denied making any substantial profit through the sales. You also told the pre-sentence report writer that you stopped selling, or obtaining drugs over two years ago because it was not the path that you wanted to take and you did not want that behaviour to affect your business.

[24]      Your parents expressed the belief to the pre-sentence report writer that the offending was a one-off mistake and that you are unlikely to return to drug dealing.

[25]      You stated that you have been abstaining from the use of both alcohol and drugs and have no intention to resume illicit drug use. You no longer associate with your co-offenders, or others with a tendency for criminal conduct.

[26]      The pre-sentence report writer described you as being genuinely regretful of the offending and very much aware of the hurt that your offending has inflicted on others, including your family. The report writer assessed your risk of reoffending and your risk of harm to others as low. The report recommended a sentence of community detention and community work.

[27]      You are currently performing voluntary work for the Salvation Army, Henderson. This has been happening since 10 November 2014 and, to date, you have performed 80 hours. The reference from the Salvation Army Welfare Manager, Faith Bishop, describes you in very positive terms. You are described as a valued member of the team, who always turns up on time, displays a great attitude and a willingness to undertake any task as instructed. You have been in a position of trust where you have gone out into the local community and done a number of collections on behalf of the Salvation Army. You have also indicated that your willingness to talk to youth about fitness and the importance of good nutrition, which the Welfare Manager notes as being a major problem with Waitakere youth. The Welfare Manager also notes that you and your business partner have become part of the “Adopted Families Christmas Initiative” and that you have adopted two families.

[28]You also provided the Court with a psychologist’s report.

[29]      This report notes that you have said to your psychologist that around the age of 17 years, you started using party pills with friends in a social setting. You denied using methamphetamine and other illegal substances. You said that you stopped using these pills on your own accord prior to your arrest. You described yourself as a social drinker in the past, but said you have not consumed alcohol over the past years.

[30]      Your psychologist says that you have some personality characteristics which have made you vulnerable to the influence of others in a negative way. She says that at the time of the offending, you were immature and had a “high need for approval”. You were just beginning your career, and she describes you as being desperate to fit in with the new group at the gym where you had just started working. She said you wished to be accepted by others. She says that by providing your friends with drugs, you were made to feel important. You became accepted at the gym quickly, which dealt with your fears of social isolation. She notes that you withdrew your involvement with the supply of drugs when you realised that you were putting your career at risk.

[31]      She reports you as now being drug free, and having worked hard to establish your business. She opines that you are very focused on your business and that your personality characteristics continue to drive you to success. She says that you no longer associate with the anti-social peers, and you now have what she describes as a pro-social attitude towards society. She says that your passion and motivation towards your business are factors that reduce the risk of your reoffending.

Crown submissions

[32]      The Crown submits that the aggravating features of the offending of both of you are the commercial nature and scale of the offending, the level of planning and premeditation that was involved, and the harm that is caused to the community.

[33]      Mr Reeves, the Crown submits that the total value of your actual sales, using your admitted values, was between $173,812 and $228,700. If you take the police estimate of the value of the tablets sold, they came out at just under $366,000.

[34]      In relation to you, Mr Rakich, the Crown submits that the total value of your actual sales was between $4,000 and $5,000. When the conspiracy offending is taken into account, had the class C tablets been sold, the total value of the sales would then have come up to $56,000 to $70,000.

[35]      The Crown in its written submissions cited the guideline decision for class C cannabis offending, R v Terewi [1999] 3 NZLR 62 (CA), and submitted that despite the case being about cannabis, the case provides a useful reference point in the context of sentencing for other class C drugs.

[36]      Mr Reeves, the Crown submits that your offending falls within class three of Terewi, attracting a starting point of four years’ imprisonment. The Crown says that your offending is less serious than that of Mr Dodd, due to the lesser amount of pills involved, but that you have the additional aggravating feature of the production charge.

[37]      For you, Mr Rakich, the Crown says that your offending is most similar to the case R v Holden HC Timaru CRI-2010-076-463, 4 November 2010, and the Crown submits that your offending falls into class two of Terewi and attracts a starting point of three years’ imprisonment.

[38]      The Crown does not point to any personal aggravating factors that might warrant an uplift in sentence. In terms of personal mitigating factors, the Crown submits that whilst both of you were in your early twenties at the time of the offending,

there is no presumption in favour of a youth discount and that an assessment must be made of all the circumstances.

[39]      The Crown submits that since Mr Reid and Mr Dodd were sentenced, the Court of Appeal has re-emphasised the low recognition that a sentencing Judge can give for personal circumstances in drug sentencing.

[40]      The Crown cites R v Wang [2014] NZCA 409, and submits that a large discount for personal mitigating factors is not warranted, and says the comments of the Court of Appeal in R v Wang is a strong reminder of this. Further, if this Court considers the sentences for your co-offenders, who have been sentenced earlier, were manifestly lenient, this Court should not impose the same sentence in the interests of parity, based on the principle that one inadequate sentence does not justify another. The Crown here relies on the decision in Feterika v R [2008] NZCA 127, where, in terms of the parity principle, it is said the application of that principle should not lead a sentencing Judge to follow an earlier sentence if that was manifestly inadequate.

[41]      In relation to the guilty plea discount, the Crown submits that your pleas were not entered as soon as reasonably practicable and, in the circumstances, a discount of between 15 and 20 per cent would be appropriate.

[42]      In your case, Mr Rakich, the Crown opposes the application for a discharge without conviction.

[43]      The Crown submits that the gravity of the offending is moderately serious, and the Crown submits that the main mitigating factor of a mental condition, which was present in Rodrigo v Police [2014] NZCA 68, is not present here.

[44]      The Crown refers to three appellate decisions involving drug offending where a discharge without conviction was granted. In Vela v R [2010] NZCA 440, the appellant was successful and obtained a discharge without conviction on a charge of possession of cannabis for supply. He was also ordered to make payment of $1,000 within 21 days from the date of the judgment. The appellant had been found with approximately 30.39 grams of cannabis, and had accepted that he had bought the

cannabis for his own use and for the purpose of supplying others, particularly friends. There was no suggestion of any commercial element in the offending. The discharge without conviction was granted because of the impact a conviction would have had on his ability to travel to the United States. The appellant was 22 years of age, and his father lived in the United States. The Court of Appeal considered the minor non- commercial nature of the offending, coupled with the appellant’s age and the connection he had with the United States, provided special circumstances where a discharge without conviction was appropriate. The offending, whilst recognised to be serious, was described as being at the lowest category of such offending and, accordingly, the impact of the conviction on the appellant’s ability to travel to the United States was seen to carry consequences out of all proportion to the gravity of the offence. The Crown submits in its written submissions that the case is distinguishable from the present where there was a clear commercial element to the offending, and a more substantial quantity of class C drugs was involved.

[45]      In another Court of Appeal decision, Rodrigo v Police, the appellant successfully applied for a discharge without conviction in relation to a conviction for the supply of the class B drug, Ritalin. Again, the Crown submits that the circumstances of this case are different from the present. First, the offending was minor. Mr Rodrigo was found with 17 Ritalin tablets, and he said he had been supplying them for a period of approximately six months to three people. He was 22 years old. He readily admitted his offending to the police, and entered a guilty plea at an early stage. He was remorseful, he had family support, and his likelihood of reoffending was assessed as being low. He was assessed as having the disorder, ADHD. There was medical evidence to show that persons with this condition, if appropriately treated, are less likely to reoffend. The consequences of a conviction related to the impact it would have on Mr Rodrigo in terms of his ability to enter the United States and Canada. He was an only child. His parents lived in New Zealand. He had no other family, but he did have an uncle in the United States, who was willing to provide him with financial and emotional support, if he went to live and work there. He also had an aunt in Canada.

[46]      The Crown submits that Rodrigo is clearly distinguishable from the present case. It refers to the general comment of the Court of Appeal in Rodrigo that

ordinarily, drug dealing is too serious to grant a discharge without conviction, but that is not to say the test for granting one can never be met.

[47]      The Crown submits that in Rodrigo, the appellant was able to meet the test for a discharge without conviction because the circumstances showed he was not involved in a sophisticated operation. He supplied only three associates, and only received profit from one of them. The profits were not more than $300, and he used the money to pay for Ritalin for himself, and to help him study. It is not clear how many pills he had sold, but on the admitted number of pills, and the admitted profit, it is likely to have been no more than 60 to 120 pills. He was 22 years old at the time, of good character, and immediately admitted his offending; and there was the fact that he suffered from ADHD himself, which went some way to explain his involvement in the offending and, if proper treatment was received, there was a low likelihood of reoffending. The Court of Appeal described the offending as:

[18]  … Low level drug dealing for minimal profit by a young offender,  who was otherwise of good character, whose ADHD was undiagnosed and untreated, who has now taken steps to treat his condition and who is unlikely to reoffend.

[48]      Bigy v Police [2012] NZHC 2852 was a successful appeal to this Court against a refusal to discharge without conviction. The appellant offered to supply 100 class C tablets, being commonly known as “green cat” party pills. Courtney J considered the number of pills sold was not especially large, and the level of commerciality low. She described it as “an opportunistic sale of pills left over from personal use”: [8].

[49]      Mr Rakich, in the present case, the Crown submits that as regards the aggravating factors of the offending, you actually sold at least twice the amount of pills than those offered for sale in Bigy v Police. You sold approximately twice the amount of drugs than the Ritalin sold in Rodrigo. The Crown argues that whilst the offending in Rodrigo involved class B drugs, and not class C, the Court of Appeal has stated that it regards the drug Methylone as a more serious class C controlled drug than cannabis: see R v Fraser [2013] NZCA 250 at [14]. Accordingly, nothing can be made from the fact that in Rodrigo, the drugs were class B.

[50]      Furthermore, the Crown says that here, in addition to the sale of 200 class C tablets, you have conspired to sell at least 2,600 such tablets. Taking the payment you received for the pills that you did sell, if you had proceeded to sell an additional 2,600, the total value of your offending would have been between $56,000 and $70,000. The Crown accepts that is the gross value. This, in the Crown’s view, amounts to commercial offending involving a large number of tablets over a three and a half month period. The Crown accepts that in your case, Mr Rakich, you have held the least culpable role in this operation, and your age at the time of the offending, your guilty plea and your rehabilitative efforts are recognisable mitigating factors, but nonetheless, the Crown contends that they are not as strong as the mitigating factors in Rodrigo.

[51]      In regards to the consequences of a conviction, the Crown submits that under United States immigration law, you will be ineligible to receive a visa, even if you are discharged without conviction as, under United States law, the fact you have admitted to the offences is enough to preclude you from gaining entry into the United States.

[52]      The Crown accepts that you could apply for a waiver and that the decision to waive exclusion is discretionary. However, the Crown submits that the requirement to apply for a waiver applies whether you are convicted or not. The Crown says that the extra consequences associated with a conviction are, therefore, minimal.

[53]      Turning to the impact on your business, the Crown submits that any recent negative effect on the business results from the fact that you have been charged, as opposed to convictions being entered. Further, the fact that you have been denied a visa to the United States earlier this year illustrates the point that it is the charges themselves which prevented you from obtaining a visa. The Crown submits that there is no real and appreciable risk that the company you run will suffer in the long term.

[54]      The Crown also argues that the consequences of a conviction do not outweigh the gravity of the offence here, and cites Zhang v Ministry of Economic Development HC Auckland CRI-2010-404-453, 17 March 2011, where Asher J said that the “perception of what the right immigration consequences should be” is best left to the immigration authorities: [14]. The Crown considers that even if a conviction would

prevent you from travelling to the United States, and a discharge would not, this consequence is not out of all proportion to the gravity of the offence, and that the United States has strict immigration rules in place for a reason.

Mr Reeves’ submissions

[55]      Mr Reeves, in relation to you, your counsel submits that the parity principle must apply between you and your co-offenders. Your counsel submits that you deny producing many pills. You say that another co-offender produced them. Your counsel submits that your actions are analogous to Mr Reid’s, but disputes that your offending is more serious than Mr Reid’s. Your counsel submits a starting point of two and a half years’ imprisonment is appropriate.

[56]      In terms of personal circumstances, your counsel submits that you have shown remorse; that your employer supports you; you have a five year old son, who has given some stability in your life. Further, you have successfully abided by the conditions of your bail, and you have had no contact with co-offenders during the course of this proceeding. Your counsel submits that discounts should be awarded for your guilty plea that came as soon as the charges were amended, your remorse, relative youth at the time of the offending, and your efforts at rehabilitation. Here, your counsel refers to your participation into the two community alcohol and drug services’ courses. Your counsel submits a sentence of home detention, coupled with community work, is the appropriate sentence. There has, however, been the difficulty you have faced of being unable to find a home from which it would be suitable for you to serve a sentence of home detention.

Mr Rakich’s submissions

[57]      Mr Rakich, your counsel submits that your offending involved a total of 10 transactions over a particular period of time, which was submitted in Court today was simply over the month of October 2011, and that the offending of your co-offenders was for a substantially longer period of time.

[58]      Your counsel submits that a distinction can be drawn between the conspiracy charge and the actual supply of the class C tablets, depending on how far the conspiracy has progressed to the point of completion. Your counsel submits that in relation to the last offence, the conspiring to supply 1,000 tablets, did not go further than a discussion with Mr Dodd regarding whether a friend could purchase 1,000 tablets on credit. Your counsel says that as this conspiracy to sell was still in its infancy, this mitigates the overall seriousness of the conspiracy offending. However, your counsel accepts that your offending escalated over time, as you foolishly agreed to facilitate the bulk sales of class C tablets on behalf of others.

[59]      Your counsel accepts the transactions involved a moderate degree of commerciality, but submits this was not the underlying motive for your offending. Your counsel has referred to the reference in the psychologist’s report and the opinion expressed therein on the reasons for the offending. Your counsel submits that in constructing a sentence, a starting point of three years’ imprisonment would be appropriate.

[60]      However, your counsel submits that you should be discharged without conviction, and that there is no bar to such applications in the context of drug offending. Your counsel submits that if convicted of these offences, there is a real and appreciable risk that you will be denied entry into the United States, which in turn creates a real and appreciate risk that there will be a significant adverse effect on the business that you have built up since the offending.

[61]      Your counsel today in Court has attempted to portray you as someone for whom the past has come back to haunt you, and by that I mean your counsel has emphasised that the offending occurred in the latter part of 2011, that after that, you

began steps to build up a business and since then, you have built up a significant business, only to find recently the police arrive on your doorstep, and with the past offences being brought back, and with the ability to, not only have you held accountable for that offending, but to destroy all that you have now built up, which, in turn, has an effect not only on you but on others, because the company you have created now employs seven persons.

[62]      You have already been declined a visa that you applied for to attend an expo event in Las Vegas while you were awaiting sentencing. Your counsel submits that your failure to maintain access and profile within the substantial American market will significantly limit the growth opportunities of your company in both the short and long term.

[63]      Your counsel submits that the main consequences of a conviction in your case is this impact on your business, and your ability to travel to the United States to further your career. In that regard, you are an on-line personal trainer, and the CEO of your business, Josef Rakich Fitness Limited. You no longer work as a personal trainer at a gym; your business has an on-line platform. Through your website, you sell personalised meal plans and work-out programmes to clients, to help them achieve their physical goals. You and the general manager of the business, Mr Franich, have helpfully explained the history of Josef Rakich Fitness to me in the material that you have supplied.

[64]      Mr Franich has deposed that  in  late  2011,  you  started  the  business  Joseph Rakich Fitness. At that time, you were running the business from your parent’s garage, and you were also working as a personal trainer at the gym. You were initially running the business single-handedly.

[65]      Although  officially  involved  as  General  Manager  from  March  2014,   Mr Franich has been involved earlier, since late 2011. The business has now grown from three employees to seven. Mr Franich has deposed that since the latest website was launched in November 2013, the business has continued to grow and there are plans to better cater to the female client base.

[66]      Mr Franich says further that the business’ current marketing strategy has reached a saturation point and that 90 per cent of the customer base is international. The main market is the United States. Therefore, to fully realise the potential of the business, you need freedom to travel internationally to promote the brand.

[67]      I have reviewed the financial information that you have provided to the Court. I can see from that that the business has grown significantly. For the financial year ending 31 March 2011, the business’ sales were $6,849, with a net profit of $4,262.30. For the year ending 31 March 2014, the total sales were $807,350. Only $44,505 of that amount was generated from sales in New Zealand. Therefore, I accept that the majority of your market is overseas. The net profit for the recent financial year was

$476,628.

[68]      You are also a brand ambassador and a sponsored athlete of EHPlabs, a sports nutrition company in the United States. You have been advised by Mr Basha, the CEO and Executive Director of EHPlabs, that your sponsorship contract would be terminated if you are denied entry to the United States to attend events as required under your sponsorship contract.

[69]      This year you were denied a visa to attend the 2014 “Mr Olympia” expo in Las Vegas as part of your contractual obligations to EHPlabs. Mr Basha has noted in a letter to the Court that your absence was costly to the company. EHPlabs intended to promote your attendance at the event, and many of your fans and business associates had attended the event hoping to meet you.

[70]      Mr Basha opined that if a conviction were to be entered against you, this would render it impossible for you to travel to the United States in the foreseeable future. You deposed that you fear that a conviction would have a domino effect on your business if you are unable to maintain your brand exposure overseas.

[71]      Your counsel submits that a conviction for supply and conspiring to supply class C drugs like party pills would seriously limit the growth opportunities of the business in the short and long term. There is the impact that a serious downturn in the business would have on your overall future, and the prospects of your rehabilitation.

You have built this business from nothing. If you lose it, from what I have seen, there are very little other prospects in the way of a career. That, in turn, would reduce your chances or rehabilitation.

[72]      Your counsel points to the steps that you have taken since the entry of a guilty plea. To indicate remorse and rehabilitation, there is the 80 hours of voluntary service that you have performed at the Salvation Army. You have offered to make a payment of between $20,000 to $30,000 to a charity of the Court’s choice, as a condition of obtaining a discharge without conviction.

[73]      Your counsel submits that your own circumstances fit the category of special circumstances that caused the Court of Appeal in Rodrigo to grant a discharge without conviction. Whilst it is accepted that there were fewer drugs sold there, it is pointed out they were class B drugs. Whilst the amount of money generated there from the sales was less, nonetheless your counsel today seemed to me to make a case for saying that the principle behind the decision in Rodrigo is that the Court should stand back and be prepared to assess on the individual circumstances of any case whether a particular case where a discharge without conviction is sought reveals special circumstances which takes it out of the ordinary. In Rodrigo there was the mental element, the fact that there was a young, immature man with a disorder. Here, your counsel says look at all that you have done to date to build up the business. This is a situation where, yes, you sold party pills in the latter part of 2011, but then stopped of your own volition. You did not stop as a result of the police apprehending you. The summary of facts shows the fact that the offending was limited to the latter part of 2011. Your counsel submits that this shows that you of your own volition saw the error of your ways, and have then turned your life around yourself, done something very constructive with it, only to then find this reminder of the past and what your counsel described as youthful indiscretion at a time when you were just starting to make your way, coming back with the potential to destroy everything that you have done to date.

[74]I now turn to the purposes and principles of sentencing.

Principles and purposes of sentencing

[75]      In order to determine an appropriate sentence, the Court must take into account the relevant purposes provided for in s 7 of the Sentencing Act 2002. These include: the need to hold offenders accountable for the harm done to the community by the offending; to promote in them a sense of responsibility for, and acknowledgement of, the harm of their offending; to denounce and deter such conduct; to protect the community, but also to assist in the rehabilitation and reintegration of offenders into the community.

[76]      Regarding principles of sentencing under s 8 of the Sentencing Act, the Court must take into account the gravity of the offending, the seriousness of the type of offence, consistency with appropriate sentencing levels and similar offenders who have committed similar offences, and the need to impose the least restrictive outcome appropriate in the circumstances.

Sentencing approach

[77]      There is a three-stage approach to sentencing. First, the appropriate starting point is set. Secondly, allowance is made for personal aggravating and mitigating factors; and finally there is a discount for a guilty plea: see Hessell v R [2010] NZSC 135; [2011] 1 NZLR 607 and R v Clifford [2011] NZCA 360, [2012] 1 NZLR 23.

Setting a starting point

[78]      In setting a starting point, this Court has to be consistent with previous comparable cases. I also have to consider the principle of parity between co-offenders.

[79]      The Crown has referred to R v Terewi, which sets out the categories of offending for cannabis cultivation:

(a)Category one consists of growing small numbers of cannabis plants. It has to be remembered that this is in relation to cannabis cultivation;

(b)Category two is small-scale cultivation with some level of commercial purposes. The starting point is generally between two and four years; and

(c)Category three is the most serious class of offending, involving large scale commercial operations. The starting point will generally be four years or more.

[80]      The Court of Appeal in Fraser v R at [12] endorsed R v Terewi as providing a useful reference point in the absence of a guideline judgment for drug offending of the present nature. In Fraser, the Court dealt with the class C drug Methylone, an analogue of ecstasy, and considered it to be more serious than cannabis: [14].

[81]      In R v Holden, Wild J sentenced Mr Holden for four charges for the possession of class C drugs for supply. As a result of two police searches, the police found class C drugs with a total street value of $27,000. Wild J identified the offending as falling within category two of Terewi, and adopted a starting point of three years’ imprisonment.

[82]      In R v Manuel [2013] NZHC 150, Allan J sentenced Mr Manuel to eight months’ home detention for one charge of supplying a class C variety of ecstasy. Mr Manuel admitted to selling approximately 30 pills at $60 each from May 2011 until August 2011. The Judge adopted a starting point of two and a half years’, noting that although Mr Manuel dealt in relatively small quantities, significant financial gains were obtained.

[83]      In Wood v R [2014] NZCA 183, the appellant unsuccessfully appealed against a sentence of two years, five months after he was found guilty at trial of 19 sales of a class C analogue of ecstasy and of possession for supply. He had sold, or had for sale 474 pills in total. A starting point of three years, three months’ was adopted by the sentencing Judge. On appeal, the Court said that this starting point, though high, was within the range: [28].

[84]      In this case, I consider parity between co-offenders is an important consideration. Three of the co-offenders, Mr Abrahams, Mr Dodd and Mr Reid, have already been sentenced.

[85]      In the case of Mr Dodd, Police v Dodd [2014] NZHC 1074, Andrews J sentenced him to 12 months’ home detention and 250 hours’ community work. Mr Dodd offered to sell 2,307 pills, sold 9,955 pills, and conspired to sell 13,285 pills. The Judge saw the offending as commercial and at the top end of band two of Terewi. A starting point of four years’ was adopted.

[86]      In R v Reid [2014] NZHC 426, Mr Reid was sentenced to 12 months’ home detention and 200 hours’ community work. He sold 447 pills, offered to sell 851 pills, and conspired to sell 1,000 pills. Woodhouse J was satisfied that the starting point for the supply and conspiracy to supply offences fell in the middle of band two of Terewi, and adopted a starting point of three years’ imprisonment. Regarding the production offending, the Judge noted that there was no evidence of the quantity produced. He gave Mr Reid the benefit of the doubt and increased the starting point to three years’, six months to account for the totality of the offending.

[87]      Mr Abrahams, was sentenced in the District Court. He received a sentence of seven months’ home detention and 250 hours’ community work; though I accept the Crown’s submissions that the nature of the offending there was not comparable to the other co-offenders.

Mr Reeves

[88]Mr Reeves, I deal with your sentence first.

Starting point

[89]I now propose to set a starting point for your offending.

[90]      Your offending is clearly more serious than Mr Reid. I consider your offending to be less serious than Mr Dodd. Both of you sold over 9,000 tablets. However, Mr Dodd also conspired to sell 13,285 tablets, while you conspired to sell only 300 in total.

[91]      Whilst the Crown has submitted that I should treat your offending as being in band three of Terewi, I note that when sentencing Mr Dodd, Andrews J placed his offending at the top end of band two. As I consider your offending to be less serious than that of Mr Dodd, I consider that the mid to high range of band two is the most appropriate category in which to place your offending.

[92]      I propose to treat the selling charge as the lead offence. In this sentencing, I give weight to the principle of parity between co-offenders. As already stated, I consider that in comparison to the offending of Mr Dodd, the offending here is less serious, and so the starting point should reflect that. I adopt a starting point of three years’ imprisonment. This starting point may seem lenient in comparison to Wood, though I note that in that case, the Court of Appeal described the starting point as on the high side.

[93]      I uplift the starting point by nine months to three years, nine months’ imprisonment, to take into account the conspiracy to supply and the production charge. I note, Mr Reeves, that the pill press was found at Mr Reid’s home and not yours. Woodhouse J considered that Mr Reid’s involvement in the production of the class C tablets was minor, as there was no evidence of the quantity produced. Your involvement, Mr Reeves, must be treated as of even lesser seriousness, given it was only on one occasion and nothing is known of how many pills were produced on that occasion. You appear to have had minimal involvement in the production of the tablets.

Adjusting the starting point

[94]      In terms of adjusting the starting point, there are no aggravating factors warranting an uplift. I now consider mitigating factors but before doing so, I note the approach taken to personal mitigating factors in the sentencing of your co-offenders.

[95]      In Dodd, Andrews J applied a total discount of 18 months for Mr Dodd’s youth, his strong rehabilitative efforts, his previous good character and his genuine remorse. This works out as a discount for personal and mitigating factors of approximately 38 per cent. Mr Dodd was 21 to 22 years of age at the time of the offending.

[96]      In Reid, Woodhouse  J reduced the sentence by 15  months on account of    Mr Reid’s strong rehabilitative prospects, his lack of previous convictions, his genuine remorse and his age. At [22] of the sentencing notes, the Judge did not regard the discount as generous, but rather “as a proper reduction to encourage you … to lead a constructive life and avoid further offending”. This was a discount for personal and mitigating factors of approximately 36 per cent. Mr Reid was 22 to 23 at the time of the offending.

[97]      The Crown has cautioned me in relation to discounts for personal factors in drug offending, citing comments made by the Court of Appeal in R v Wang:

[28] With respect to the discount of one year for Mr Wang's previous good character, we are satisfied that this was contrary to principle. There is clear authority in this Court that previous good character can hold little weight in relation to drug offending of this kind. This Court in R v Wallace said:

Personal circumstances are relegated in importance to the need to deter dealing in drugs with their potential harm to the vulnerable. In this context dealing by addicts warrants no different response from dealing out of greed or otherwise motivated.

[98]      However, those comments must be read in light of the Supreme Court’s decision in Jarden v R [2008] NZSC 69, [2008] 3 NZLR 612, where it was said (emphasis added):

[12] … As the Courts have repeated said, and as we emphasise again, in sentencing those convicted of dealing commercially in controlled drugs the personal circumstances of the offender must be subordinated to the importance of deterrence. But this does not mean that personal circumstances can never be relevant.

And at [14] it was said:

[14] The personal circumstances of an offender may be relevant either because they contributed in some way to the offending, or on purely compassionate grounds.

[99]      The Supreme Court in Jarden stressed in the extracts above that personal circumstances can be relevant where they contributed in some way to the offending. In this case, it could be argued that youth was a factor that contributed in some way to the offending. Further, I do not consider the comments in Wang to override the mandatory considerations where they are applicable under s 9 of the Sentencing Act.

[100]   I note that in Wood, the sentencing judge gave a 25 per cent discount for personal circumstances. The Court of Appeal considered this discount as generous but saw the discount as “an expression of the least restrictive outcome principle” under s 8(g): [30]. Lastly, neither Jarden nor Wang was decided in the context of class C drug offending. In my view, deterrence is arguably of less importance where the drugs involved have a less harmful effect on society than class A or class B drugs. The fact the Misuse of Drugs Act creates a hierarchy of class A, B and C drugs, in my view, is a recognition that each category of drugs has their own perceived harmful effects on society, and it must be recognised that class C drugs are at the bottom of the hierarchy.

[101]   I am aware of the principle that the Crown has raised, namely that an inadequate sentence cannot justify additional inadequate sentences on the basis of parity. The Crown cited Feterika v R, where the Court of Appeal said “a disparity argument cannot be built on an unjustifiable sentence”: [47].

[102]   Whilst this is true, disparity in sentencing between co-offenders can result in successful appeals against sentence. I refer to the decision of Fisher J in Jacobs v Police HC Rotorua AP11/90, 21 May 1990, where it is stated (at 5 to 6):

(a)Where co-offenders participate in one crime, unequal sentences will always be warranted if based upon differences in personal circumstances, personal history or individual involvement in the offence itself.

(b)Where no distinctions can be drawn on one of those grounds, a marked disparity in sentence is generally to be avoided in order to maintain public confidence in the even-handed administration of justice.

(c)Because of the principle in (b) the Court may in some cases be justified in reducing a sentence [and here the Judge is talking about appeals] which, although not itself manifestly excessive, would otherwise produce a marked disparity compared with the treatment of a co-offender.

…

(e)[D]isparity in the treatment of co-offenders as a ground of appeal against sentence will normally be upheld only where the disparity is unjustifiable and gross. …

(f)The test as to whether there is a disparity is an objective one. A sense of grievance by the individual offender is not relevant unless the independent observer would share the concern as to disparity.

[103]The same sentiments was recently expressed by the Court of Appeal in

Henwood v R [2013] NZCA 528 at [19]:

[19] Not every difference in sentence or starting point for co-offenders will support an appeal on the ground of disparity. The issue is whether a reasonably minded independent observer, aware of all the circumstances of the offence and of the offender, would think that something had gone wrong with the administration of justice. The difference must be unjustifiable or gross.

[104]   In this case, the personal mitigating factors between the co-offenders are similar. The discounts awarded for Mr Dodd and Mr Reid could be said to be generous. But to refuse to grant a similar discount to Mr Reeves and Mr Rakich on the basis that the sentences for the co-offenders were inadequate would, in my view, result in a gross and unjustifiable difference in their sentences.

[105]   If a lesser discount is awarded to Mr Reeves and Mr Rakich, the end sentences for each of them would exceed two years’ imprisonment. In such circumstances, there would be no jurisdiction to impose home detention or a community-based sentence. In my view, a reasonably minded independent observer, aware of the facts of the offending and the similar mitigating factors between the co-offenders, would think that something had gone wrong with the administration of justice if sentences of imprisonment were to be imposed on the offenders here. As was recognised in Tutakangahau v R [2014] NZCA 279, [2014] 3 NZLR 482, alternative sentences to that of imprisonment are more directed at an offender’s prospects of rehabilitation. Here, two offenders linked with this operation have had the benefit of community- based sentences. That end will assist their rehabilitation. Their offending, their personal and mitigating circumstances are, in my view, much the same as yours, Mr Reeves, and yours, Mr Rakich. I consider, therefore, that to now deny such sentences as the Crown would have me do would undermine public confidence in the judiciary, and the administration of justice.

[106]   Lastly, I note that if the Crown was of the view that Mr Dodd or Mr Reid’s sentences were manifestly inadequate, it could have appealed against them. But it has not done so.

[107]   Now I propose to assess the mitigating factors that are personal to the offenders.

[108]   Mr Reeves, you have no relevant criminal history and I consider that you can be treated as if you were a first-time offender.

[109]   The pre-sentence report was very positive. It referred to your remorse, your motivation to change and the rehabilitative efforts that you have made. You were 21 to 23 years at the time of the offending. Your personal circumstances are much the same as those of Mr Dodd and Mr Reid.

[110]   The leading authority on youth discounts is the Court of Appeal’s decision in Churchward v R [2011] NZCA 531, (2011) 25 CRNZ 446. The Court recognised that youth is a mitigating factor and is a relevant consideration in regards to the least restrictive outcome principle in s 8(g) of the Sentencing Act. It was also recognised that:

[77]      Youth has been held to be relevant to sentencing in the following ways:

(a)There are age-related neurological differences between young people and adults, including that young people may be more vulnerable or susceptible to negative influences and outside pressures (including peer pressure) and may be more impulsive than adults.

(b)The effect of imprisonment on young people, including the fact that long sentences may be crushing on young people.

(c)Young people have greater capacity for rehabilitation, particularly given that the character of a juvenile is not as well formed as that of an adult.

[111]   While you were in your early twenties at the time of the offending, I consider that the circumstances surrounding the offending nonetheless warrants some recognition for your youth that was given to Mr Reid and Mr Dodd, and I give a 10 per cent discount.

[112]   I give an additional 10 per cent discount for your genuine remorse. I recognise that you have taken all the steps that you can to turn your life around. I also give you 10 per cent for your rehabilitative efforts and your low risk of re-offending. This is evident through the rehabilitation courses that you have attended and the pre-sentence report. For Mr Dodd, Andrews J recognised his previous good character, despite having non-drug related previous convictions. As I said, I propose to treat you as a first offender. Your offences are minor traffic offences. I consider a five per cent discount is important here too; and I note the reference Mr Kovacevich made today to ss 9(2)(f)(a) of the Sentencing Act, and the credit that you should be given for pleading guilty in terms of saving the community resources.

[113]   This gives a total of a 35 per cent discount to your starting point of three years, nine months’ imprisonment for personal factors. That brings the sentence down to two years, five months’ imprisonment. While this discount may be high for personal factors, it is less than the discounts given for personal factors in Dodd and in Reid. I consider that as the circumstances are much the same, the discounts that are given for personal mitigating factors should be reasonably comparable.

[114]I now turn to the guilty plea discount.

Guilty plea discount

[115]   The Crown submits that a 15 to 20 per cent discount for your guilty plea is appropriate here. The Crown says that as you unsuccessfully applied for additional disclosure, your guilty pleas were not entered as soon as reasonably practicable.

[116]   Whilst that application was unsuccessful, I note that at the time of the disclosure hearing in the District Court, you faced an additional charge of participating in an organised criminal group. This charge was subsequently withdrawn on 11 August 2014, which was the date that you pleaded guilty. Thus, there is some explanation for the earlier refusal to enter a guilty plea, which the Crown appears to have recognised by withdrawing one of the original charges.

[117]   In the case of Dodd and Reid, a full 25 per cent discount was awarded. In both those cases, the guilty pleas came following the amendment of the charges from class B to class C drug offending.

[118]In Hessell v R, the Supreme Court said:

[75] The reduction for a guilty plea component should not exceed 25 per cent. That upper limit reflects the fact that remorse is dealt with separately. Whether the accused pleads guilty at the first reasonable opportunity is always relevant. But when that opportunity arose is a matter for particular inquiry rather than formalistic quantification. A plea can reasonably be seen as early when an accused pleads as soon as he or she has had the opportunity to be informed of all implications of the plea.

[119]   In light of the date that the charge of participating in an organised criminal group was withdrawn, I consider that your plea did come at the first reasonable opportunity and warrants the full 25 per cent discount.

[120]This reduces your sentence to one of one year, 10 months’ imprisonment.

[121]I now deal with home detention.

Home detention

[122]   As the sentence of imprisonment I have reached is a short term sentence of imprisonment, I consider that home detention is adequate to serve the principles and purposes of sentencing in your case. Whilst denunciation and deterrence are important considerations, so too are the purposes of rehabilitation and reintegration, particularly with a young offender who is not likely to re-offend in the future, who has a young child, and who is now gainfully employed, and has taken all the steps that you have done to turn your life around.

[123]   The Court of Appeal in R v Hill [2008] NZCA 41, [2008] 2 NZLR 381 at [33] recognised that the advantages of home detention include low rates of re-conviction and positive support for offenders’ reintegration and rehabilitation. Further, in Tutakangahau v R at [45], the Court of Appeal drew a link between the greater capacity for rehabilitation in the case of young offenders and at [46] the use of alternative sentences to that of imprisonment that are “directed at the prospects of rehabilitation”.

[124]   I am satisfied, therefore, that if an appropriate address from which you are to serve a sentence of home detention is available, that is the sentence that should be imposed. I do not have the relevant report at the moment. That is not your fault. I directed that full reports be made available, and they are not available for me today.

[125]   Instead, I now direct that the Probation Service is to provide me with a stand- down report on the suitability of the address at 97 Ferry Parade, Herald Island, Auckland, from which you can serve a sentence of electronically monitored home detention.

[126]   I also direct that the probation officer, Sheryll Simons, or her supervisor, is to attend this Court at 10.00 am on Friday, 12 December 2014, where the sentencing will resume. If it turns out that I am told tomorrow morning that the address is a suitable address for electronic monitoring, then the sentence will be one of 12 months’ home detention, with 200 hours’ community work.

[127]   On the other hand, if that address is not suitable, I will then be left with no alternative but to sentence you to imprisonment. But, in that case, I will direct as I can under s 80I of the Sentencing Act, giving you leave to apply for cancellation of the sentence, and leave to apply for home detention, once you have found a suitable address.

[128]   For the moment, between now and 10.00 am on 12 December 2014, your bail will continue.

[129]I now turn to Mr Rakich.

Mr Rakich

[130]Mr Rakich, you seek to be discharged without conviction.

[131]   The relevant sections of the Sentencing Act are ss 106 and 107. The principles for discharges without conviction have been well established in R v Hughes [2008] NZCA 546, [2009] 3 NZLR 222 at [11] that:

[10]      … the court must first consider whether the disproportionality test in s 107 has been met. If (and only if) the court is satisfied the s 107 threshold has been met, may the court proceed to consider exercise of the discretion to discharge without conviction under s 106.

[11]      The decision as to whether the test under s 107 has been met is not a matter of discretion. It is a matter of fact requiring judicial assessment, which can be subject to appeal on normal appellate principles: Rajamani, at para 5. The discretionary power of the Court to discharge without conviction under s 106 arises and exists only if the Court is satisfied that the s 107 threshold has been met.

[132]   The Court of Appeal in A (CA747/10) v R [2011] NZCA 328 at [22] sets out the three step-approach to s 107 assessments:

[22] Section 107 codifies the common law criteria for a discharge without conviction and requires a three-step process:

(a)Identify the gravity of the offending by reference to the particular facts of the case;

(b)Identify the direct and indirect consequences of a conviction; and

(c)Determine whether the direct and indirect consequences of conviction would be out of all proportion to the gravity of offending.

[133]I will consider each of the three factors in turn.

Gravity of the offending

[134]   In terms of the gravity of the offending, Mr Rakich, you sold a total of 200 pills over three separate occasions and conspired to sell a total of at least 2,600 pills over seven occasions. I note your counsel’s submission that in respect of the conspiracy in relation to the 1,000 pills, the conspiracy only involved a discussion with Mr Dodd

regarding whether your friend could purchase 1,000 pills on credit. The conspiracy had not progressed close to the point of completion and was, as Mr Couchman has submitted, in its infancy.

[135]   Looked at overall, my view is that the offending can be characterised as moderately serious. However, this view needs to be re-assessed in terms of the personal and mitigating factors.

[136]   Your counsel submitted that your offending was for a shorter period of time than your co-offenders. I accept this submission. Mr Dodd was involved in transactions from about May 2011 until November 2011. The summary of facts shows that your overall offending is said to be spread between July 2011 and November 2011, though the schedule that I was provided with showed that it actually fell in October 2011. Mr Reeves was involved in transactions between May and November 2011, but he also admitted to a production offence, which occurred in February 2013. Mr Reid was involved in the transactions between May to November 2011, and he admitted to using the pill press between August 2012 and February 2013.

[137]   Mr Rakich, you were charged on 22 March 2013 after your home was searched by police the day before. At that time, the police located four pills at your address. Two contained the class C drug, MDPV. These tablets are not the basis of any separate charge. There is no evidence that these tablets are related to recent usage or, alternatively, were historic and just happened to be at the address as a result of historic usage. I propose to give you the benefit of the doubt here, as no possession charge has been laid in relation to those pills.

[138]   The approach to considering the gravity of the offending is set out by the Court of Appeal in Z (CA447/12) v R [2012] NZCA 599, [2013] NZAR 142:

[27] For our part, we consider that there is much to be said for the approach adopted by the Divisional Court in A(CA747/2010). That is: when considering the gravity of the offence, the court should consider all the aggravating and mitigating factors relating to the offending and the offender; …

[139]   In considering the mitigating factors relevant to you personally, there is your youth at the time of the offending (you were 20), your previous good character, your

remorse, and the fact that you have turned your life around since the offending. There is also your acknowledgement of your offending through the entry of a guilty plea.

[140]   In relation to your youth, as I have said, you were 20 years of age at the time of the offending.   The comments that I made in relation to youth discounts for      Mr Reeves are also relevant to you. In my view, your actions are partly explained, but not necessarily excused, perhaps by what has been recognised as a state of neurological development of young people, which can be in their late teens and early twenties. I refer to Churchward at [81], and R v M [2014] NZHC 1848, where Winkelmann J regarded age as “very relevant” in assessing culpability: [20]. The offender in that case was 17 at the time of the assault, and was discharged without conviction. The Judge there relied upon a psychologist’s report that stated that “[a]dolescents, especially boys, do not reach full development of their brain functioning until their early to mid-20s”: [29]. I note that your offending was when you were 20, which still falls within the range commented upon by the psychologist’s report.

[141]   That assessment is also backed up by your psychologist’s report. Ms Visser reports that you were immature at the time of the offending and that you were “desperate” to fit in at the gym where you had just started work. I accept her view that you were vulnerable due to your high need to be accepted by others at that time in your life.

[142]   I accept that these personal and mitigating factors reduce the gravity of offending to a low level of seriousness.

Consequences of a conviction

[143]   In terms of the consequences of a conviction, Randerson J’s comments in Iosefa v Police HC Christchurch CIV-2005-409-64, 21 April 2005 are often cited under this consideration, where the Judge said:

[34]      … [I]t is not necessary for the Court to be satisfied that the identified direct and indirect consequences would inevitably or probably occur. It is sufficient if the Court is satisfied that there is a real and appreciable risk that such consequences would occur.

[35]      However, the nature and seriousness of the consequences and the degree of likelihood of their occurring will be material to the Court's assessment of whether those consequences would be out of all proportion to the gravity of the offence. In other words, the higher the likelihood and the more serious the consequences, the more likely it is that the statutory test can be satisfied.

[144]   I consider that the consequences flowing from a terminated sponsorship contract are serious. They are “real and appreciable” risks. You will lose the financial benefits of the sponsorship and the business opportunities that it offers. There is the risk that you will be hindered from growing the client base overseas, particularly in the United States. It is clear that the majority of your existing clients are based outside of New Zealand, and in the United States. There is a risk that your client base may be lost. There is the risk that your client base may lose respect for your brand, as your offending does not fit comfortably with the actions of a role model that advocates healthy living, discipline and self-motivation, as opposed to drug use. Whether your business will collapse, as you fear, is not certain, but I accept that there is a real and appreciable risk that such consequences would occur if, as a result of your conviction, you were unable to travel to the United States.

[145]   The Crown here argues that the consequences relied upon are consequences that flow from the act of being charged, as United States immigration law provides that an admission of having committed drug-related offences is also a ground for ineligibility. I will consider the nuances of United States immigration law when I make the proportionality assessment.

[146]   The Court in Police v M [2013] NZHC 1101, (2013) 26 CRNZ 308 cautioned against granting a discharge when the consequences are unclear and where there is insufficient evidence to support counsel’s assertions as to the consequences.

[147]   In your case, Mr Rakich, the consequences of a conviction in terms of the impact on your business and the ability to travel to the United States for business purposes are clearly before me. Obviously, when a large part of the business is based in the United States, you will need to travel there, particularly as the brand and business revolves around you. So it is hard to see how others could go in your place.

However, there is the additional factor in your case that those consequences may also flow from your admission of the charges that you pleaded guilty to.

[148]I now turn to proportionality.

Proportionality

[149]   As the Crown would have it, you are caught under what is s 212(a)(2)(A) of the United States Immigration and Nationality Act, which provides that “any alien convicted of, or who admits having committed, or who admits committing acts which constitute the essential elements of” a drug-related offence is not to be admitted to that country.

[150]   The problem I have with the data that I have been given about the United States immigration law is that it is very clear that in relation to controlled substances trafficking, someone who has been charged and admits the charge will not be admitted into the United States unless a waiver is granted. But then there is the other issue of the moral turpitude offences.

[151]   I have been provided with the raw data of United States legislation, which is rather confused. No one has sought to interpret it for me. I do not know whether any person has practised in the United States might have been able to assist with independent evidence, but if that had happened, it certainly might have been helpful. So I am left in a position where I have the Crown’s submission that regardless of whether you are discharged without conviction, you will be ineligible for a visa. The Crown argues that you would need to apply for a waiver, regardless of whether you were granted a discharge without conviction and, therefore, the extra consequences associated with the entry of a conviction are minimal.

[152]   Whilst a discharge without conviction does not remove the application of the ineligibility provisions of the United States immigration law, in my view, a discharge without conviction must be a more favourable consideration in any application for a waiver of ineligibility. It must place the offending in a better light and help to inform the United States authorities of how the offending is viewed in this county.

[153]   The Crown has produced a letter from the United States Consulate General, who said that whilst drug offences are taken quite seriously when reviewing an applicant’s qualifications for a visitor’s visa, “each application is evaluated on its own merits”. In considering whether to recommend a waiver, the consular officer takes into account the nature of the offending, the reasons for the proposed travel to the United States, and the positive or negative effect of the planned travel on the public interest of the United States. The letter also stated that an officer would take into account evidence of reform, as well as the potential hardship in being denied a visa.

[154]   It seems to me that the fact that an offender had been discharged without conviction would be a very relevant consideration to be taken into account in the mix of those matters that I have just outlined.

[155]   I also note that in two cases, Courts in this country have granted a discharge without conviction based upon the consequence of a conviction precluding travel to the United States without a thorough discussion of United States immigration law, in terms of the impact of pleading guilty to the charge.

[156]   For example, in Rodrigo v Police, the Court of Appeal did not consider whether Mr Rodrigo would be ineligible to apply for a visa, even if discharged without conviction. The consequences put forward for the appellant in that case were the impact on travel plans to the United States and Canada, and his employment prospects.

[157]   Likewise in Bigy v Police, Mr Bigy was discharged without conviction for the possession of class C drugs for supply. The consequences put forward were that he would have difficulty travelling to countries such as Australia and the United States to locate new suppliers and new customers for his family business. Despite that Mr Bigy would, it seems, also be caught by the ineligibility provision in United States law even if discharged without conviction; this was not a factor that was discussed in the judgment.

[158]   Another useful case is Vela v R where the Court granted a discharge without conviction for a charge of possession of cannabis for supply. The appellant wished to move to the United States where his father resided. He was declined an immigration

visa. At an interview with the United States Consulate, the appellant was told that there was no chance of a waiver for any role in “trafficking in cannabis”.

[159]The Court of Appeal was satisfied that:

[16] … while the appellant has a conviction for possession of cannabis for supply, he will be ineligible to enter the United States at all. The Refusal Worksheet notes that if the conviction is overturned or reduced then the appellant may be eligible for a waiver.

[160]   The Court of Appeal was satisfied that the consequence of not being able to live with his father was out of proportion to the gravity of the offending, and accordingly, it was prepared to grant a discharge without conviction. The Court of Appeal appears to have accepted that the discharge may affect whether he could obtain a waiver or not. At [20]-[21], the Court said:

As the Crown observed, this is not a case where there is an attempt to keep the appellant's actions from the American authorities. They are already aware that the appellant has pleaded guilty to a charge of possession of cannabis for supply. And so if there is a discharge without conviction any decision the American authorities make will be based on a full knowledge of the appellant's offending.

We think, on balance, that in the special circumstances of this case we can grant the appellant a discharge without conviction based on the new evidence to the effect that while he has a conviction for this offending there is no prospect of him travelling to the United States. This, as we have said, is a very heavy burden in the particular circumstances of this case. Given that the offending, while serious, is at the lowest category of such offending, we have concluded that the consequences of a conviction would be out of all proportion to the gravity of the offence.

[161]   I consider the reasoning in Vela v R applies here. In Vela, the Court of Appeal was swayed by the fact that a discharge without conviction may mean that the appellant would be granted a waiver. I am equally swayed by the reasonable likelihood of your chances of obtaining a waiver being improved if you are discharged without conviction.

[162]   The difficulties that you face in entering the United States are supported by an affidavit of Peter Tomlinson, a solicitor, who has deposed that a former client of his was rejected an immigrant visa to the United States and was ineligible to apply for a waiver as a result of two convictions relating to cannabis. Mr Tomlinson deposed that

after a discharge without conviction, his former client was granted a visa. The Crown disputes the relevance of this affidavit, as it involved the application for a permanent immigrant visa waiver. I consider the affidavit supports the argument that a discharge without conviction would, at least, make the waiver application process easier and that an immigration officer would look at your application more favourably.

[163]   This is a finely balanced case. It could be argued that you may be granted a waiver, even if you are not discharged without conviction. However, if you were discharged without conviction, in my view, the chances of being granted a waiver are greater. Therefore, a conviction poses a greater barrier to the further development of your business than if you were to be discharged without conviction. A conviction will have the consequences of making it more  difficult  for  you  to  travel  to  the  United States, where your main market is. I accept that you are the brand and the leading face of the business you have built up. I accept that to send other employees to market the brand in the United States would simply not suffice. Further, I accept that the majority of your market is in the United States. The highly successful increase of the growth of your business is attributable to the development in the United States market. Accordingly, the loss of this market, in my view, would have a significantly detrimental impact on your business. This is not a case where the loss of a market in the United States could be replaced over time with growth in the domestic market, and I refer here to the significant difference between the value of sales in New Zealand and sales in the United States.

[164]   Mr Rakich, you are a first-time offender, who made a series of poor judgement calls when you were 20. You are a young man, who has clearly learnt your lesson and you are very unlikely to offend again. You are remorseful. You have turned your life around. You have sought to make amends for your offending with the voluntary performance of work for the Salvation Army. You are now fully dedicated to your career in the health and fitness industry, and you have built a successful business, which is something to be proud of. A conviction would put an end to all that you have achieved since the offending. That outcome, I consider, would be significantly out of proportion to the seriousness of the offending here. Further, loss of your business would impact on the persons who you employ. They are dependent on you. You have now built up a business that employs seven person. If the business is lost, those people

will suffer, as a result of ill-judged acts of yours when you were younger and less mature. If I were to refuse to grant a discharge, I consider the outcome would undermine the strong rehabilitative steps that you have taken to date. I am satisfied, therefore, that the consequences of a conviction here are out of all proportion to the gravity of the offending.

Discretion

[165]   It follows, therefore, when it comes to the exercise of the discretion under s 106 that I would discharge you without conviction.

[166]   There is this issue of the payment of the $30,000. First, I should say I have looked at the Sentencing Act. I can see nothing in the Sentencing Act that enables me to compel such payment. I am aware that in the past, payments of that nature have been made, and I am aware that there have been times when these application hearings have been adjourned to enable a payment to be made. It may be that before the Sentencing Act, it was done as part of the inherent jurisdiction of Court.

[167]   Mr Couchman, there has been an offer to make a payment of $30,000, as an indication of remorse, within five days. Is Mr Rakich prepared to do that, because it certainly adds to the importance that I attach to how he now views matters and his attempt to rehabilitate himself and his acknowledgement of the seriousness of his offending.

Mr Couchman:

Yes, it can be done in a shorter space of time, Your Honour, as well. If I could just approach –

[168]Yes.

Mr Couchman:

He can do it today.

[169]I will adjourn Mr Rakich’s hearing today until tomorrow at 10.00 am.

Duffy J

Resumption of hearing (12 December 2014)

[170]   We are treating this as a resumed hearing from yesterday. I will deal with the discharge without conviction first. I see that the sum of $30,000 has been paid to the Salvation Army. I note, as I said yesterday, that I cannot see any provision in the Sentencing Act that enables me to compel payment of that amount. I have, instead, accepted the payment: one, as an indication by Mr Rakich of the remorse that he feels, his attempt to make amends for his offending; and also I note that under s 106(3) of the Sentencing Act, a Court, when discharging an offender under s 106, does have the power to make orders in relation to payments of money to compensate any person who, through or by means of the offence, has suffered loss of damage, in terms of physical or emotional harm. Now with drug offences, there is often no direct victim, but one nonetheless can say that within the community, there are many victims in the sense that many people’s lives are blighted by illicit drug use. Accordingly, I also

consider that the payment that Mr Rakich has made, in a more general sense, fits within the notion of making reparation to the community in recognition of the harm that illicit drug use does to the community. I just want to make it clear the basis upon which the funds were paid.

[171]   So I come to the formal part of the sentencing, Mr Rakich. Would you please stand.

[172]   Mr Rakich, on the two charges to which you have pleaded guilty, pursuant to s 106 of the Sentencing Act, you are discharged without conviction.

[173]   Further, in relation to Mr Rakich’s application for a discharge without conviction, in order to support the application, Mr Rakich provided certain information, including financial information relating to the company with which he is associated. I have been advised today that there are concerns about the confidentiality of that financial information, and I accept that it is commercially sensitive information. Accordingly, I make an order that no person is to have access to the Court file on this matter without first obtaining leave of a Judge of this Court.

[174]You may stand down.

[175]I now deal with Mr Reeves.

[176]   Yesterday I adjourned the sentencing of Mr Reeves. I did so because at the time, although I considered that an appropriate sentence was one of home detention and community work, at that point in time, I did not have a report advising me of a suitable address from which Mr Reeves could serve a sentence of home detention. I directed a stand-down report yesterday. I now have such a report. The report confirms for me that the proposed address of 97 Ferry Parade, Herald Island, Auckland, is a suitable address. Accordingly, I now see no difficulties in imposing a sentence of home detention.

[177]Mr Reeves, will you please stand.

[178]   On the charges on which you have pleaded guilty and on which you have been convicted, I sentence you to a term of home detention of 12 months, and also to 200 hours’ community work. In relation to the sentence of home detention, I impose these special conditions:

(a)You are to travel directly to 97 Ferry Parade, Herald Island, Auckland, today and there await the arrival of a probation officer and staff from the electronic monitoring company;

(b)You are to remain at the address of 87 Ferry Parade, Herald Island, Auckland, for the duration of the order of home detention;

(c)You are to comply with all the requirements of an electronically monitored sentence as directed by the probation officer;

(d)You are to abstain from the possession of, and consumption of alcohol and illicit drugs for the duration of the sentence;

(e)You are to undertake an alcohol and drug programme, treatment, or counselling as directed, and to the satisfaction of the probation officer; and I note that you have already attended two such courses, and it will be up to the probation officer as to whether he or she considers there are further courses you should attend;

(f)You are to attend, and complete any other programme, treatment or counselling as directed by the probation officer;

(g)I also impose a post-detention condition, that is to attend and complete any programmes, treatment or counselling if directed by the probation officer.

[179]You may stand down.

[180]   Mr Rakich and Mr Reeves, in my view, you made some bad mistakes when you were younger. You now have an opportunity to put that behind you and get on with your lives. I suggest you make the most of that opportunity. It is not likely to come again.

Duffy J