Rozhdestvensky v Police

[2023] NZHC 1919

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CRI-2023-404-132

[2023] NZHC 1919

BETWEEN

ILYA ROZHDESTVENSKY

Appellant

AND

NEW ZEALAND POLICE

Respondent

Hearing:	3 July 2023
Appearances:	D Young for Appellant G Young for Respondent
Judgment:	21 July 2023

JUDGMENT OF WOOLFORD J

This judgment was delivered by me on Friday, 21 July 2023 at 11:00 am.

Registrar/Deputy Registrar

Solicitors:           Meredith Connell (Office of the Crown Solicitor), Auckland Counsel:     G Young, Auckland

ROZHDESTVENSKY v NEW ZEALAND POLICE [2023] NZHC 1919 [21 July 2023]

[1]    At about 12:15 am on 23 July 2021, Ilya Rozhdestvensky drove with excess breath alcohol on Apollo Drive, Rosedale, Auckland. His breath alcohol reading was 600 micrograms of alcohol per litre of breath. In explanation, he stated he had consumed some beers, wine, and some gin at his workplace before driving home to take food to his kids.

[2]    On 2 March 2022, Mr Rozhdestvensky pleaded guilty to one charge of driving with excess breath alcohol. He sought a discharge without conviction. On 16 March 2023, Judge A M Fitzgibbon declined a discharge.1 Instead, she convicted and fined him $700 with Court costs of $130 and disqualified him from driving for six months. Mr Rozhdestvensky now appeals against the refusal to grant him a discharge without conviction.

Approach on appeal

[3]    An appeal against a refusal to discharge without conviction is an appeal against both a conviction and a sentence.2 To the extent this appeal relates to the Court’s weighing of consequences against gravity, it proceeds by way of rehearing whereby the appellate court makes its own assessment of whether the criteria for discharge without conviction are met.3

[4]    This Court must dismiss Mr Rozhdestvensky’s appeal unless it is satisfied that a miscarriage of justice has occurred.4 In the context of a discharge without conviction, a miscarriage of justice means a “material error” or that the Judge “erred in applying the principles” for discharging an offender without conviction.

District Court decision

[5]    At the outset, the Judge noted she had read Mr Rozhdestvensky’s affidavit, an affidavit filed by Thomas Furlong, and the affidavits of Adrian Van de Wetering and also Wes Schwalje, CEO.

1      New Zealand Police v Rozhdestvensky [2023] NZDC 5178.

2      Jackson v R [2016] NZCA 627; Ovtcharenko v Police [2017] NZCA 65 at [5].

3      Austin, Nichols & Co Inc v Stitching Lodestar [2008] 2 NZLR 141; [2007] NZSC 103.

4      Criminal Procedure Act 2011, s 232.

[6]    The Judge then set out the three steps she must consider when dealing with an application for a discharge without conviction under s 106 of the Sentencing Act 2002:

(a)assess the gravity of the offending;

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

(c)determine whether the consequences will be out of all proportion to the gravity of the offending.

[7]    In assessing the gravity of the offending, the Judge noted that drink driving is in general regarded as a moderately serious offence. She then referred to a CADS (Community    Alcohol    and    Drugs    Service)    programme    undertaken     by Mr Rozhdestvensky and the fact that he had received a previous discharge for similar offending.  The   Judge   found   that   the   CADS   programme   undertaken   by   Mr Rozhdestvensky reduced the gravity of the offending to moderate.

[8]    In terms of direct and indirect consequences of a conviction, the Judge considered that there was an insufficient evidential basis for establishing a real and appreciable risk that Mr Rozhdestvensky’s employment would be terminated or his ability to travel for work would be compromised or his company’s proposed listing on the ASX would be affected. The Judge said she was not satisfied there was a real and appreciable risk of any of the alleged consequences occurring.

[9]    Finally, the Judge had regard to Mr Rozhdestvensky’s earlier discharge without conviction for a similar offence, which she said counted against him when exercising her residual discretion to grant him a discharge without conviction.5

Appellant’s submissions

[10]   Counsel for Mr Rozhdestvensky advances five grounds of appeal. First, counsel  submits  that  the  Judge   failed   to   address   the   second   affidavit   by Mr Van de Wetering which “confirm[ed] the appellant’s [employment] termination

5      See Swami v Police [2012] NZHC 2725; [2012] NZFLR 962.

upon conviction.” Mr Van de Wetering is a director and major shareholder of Air Guard Limited of which Mr Rozhdestvensky is co-CEO.  In his first affidavit dated  5 August 2022, Mr Van de Wetering states, “if Ilya is not delivering on his current abilities to lead the company, I will pursue his replacement”. In his second affidavit dated 28 October 2022, Mr Van de Wetering explains that the statement he made in his first affidavit means that should Ilya receive a criminal conviction, “he will be dismissed from his role as Chief Executive Officer for Air Guard”. He states that as a director he has a duty to protect the investment of shareholders and, in particular, to avoid any complications that may interfere with Air Guard’s listing on the Australian share markets or future dealings with foreign clients that require overseas travel.

[11]   Counsel for Mr Rozhdestvensky seeks leave to file a third affidavit from    Mr Van de Wetering dated 29 June 2023. Mr Van de Wetering states:

4.          Ilya informed me that he has launched an appeal and asked me to defer my decision regarding his dismissal. I don’t want to replace Mr Rozhdestvensky because as a founder of the company – he is extremely effective in his role. However, with more travel to come (and some travels will be covering Middle Eastern Markets like UAE AND Saudi Arabia) I simply can’t afford any risk of the Chief Executive being held up at boarders [sic] or the company being judged based on his personal character.

5.          As a result Ilya has been given an extension pending the outcome of his appeal. This extension will last until the third quarter of 2023 when the company launches efforts in the Middle East. In the event his appeal is unsuccessful I will begin an extended search for his replacement.

[12]   Second, counsel submits that in light of the real and appreciable risk that    Mr Rozhdestvensky will lose his employment as CEO of Air Guard Limited, the Judge erred in deciding that the consequences of a conviction do not outweigh the seriousness of the offence. Air Guard Limited is at a pivotal point in its development of innovative technology to combat future viruses like COVID-19. It has received a grant of $500,000 from the Government’s COVID-19 Innovation Acceleration Fund for “adapting, validating and commercialisation of next generation respiratory protection  to  virus   protection   for   healthcare   workers”.   Counsel   says   that Mr Rozhdestvensky is at the forefront of development, being the head of a company that has the potential to become a global player in this field using cutting edge technology.

[13]   Third and fourth, counsel submits that the Judge failed to acknowledge and give weight to the fact that the factual circumstances of the current offence were quite different to that of the earlier offence for which he received a discharge without conviction, as were his own personal circumstances. The earlier offence occurred when he and his wife had just arrived in New Zealand. His wife was heavily pregnant, and they were struggling with a young family and no support. Mr Rozhdestvensky drove drunk following a reception after he was asked to judge an advertising event contest organised by NZME. Functions of this nature encouraged alcohol consumption. His application for a discharge without conviction focussed on the effect of a conviction on an application for residency for him and his family.

[14]   The current offence arose in the context of Mr Rozhdestvensky’s deteriorating physical and mental stress. He was incredibly stressed due to work meetings and a lack of sleep (three – four hours over a period of 48 hours). He had not eaten that day. He is the father of two teenage boys (aged 15 and 17), whose mother died of cancer. He tries to get home at 7:00 pm each night to cook dinner for them, hence his comment to the Police officer who stopped him that he was taking food to his kids.

[15]   The two offences are quite dissimilar and there was nothing to suggest that the current application should be viewed in light of the earlier application.

[16]   Fifth, counsel submits that the Judge wrongfully placed emphasis on the presence of a previous discharge for the same offence when the thrust of the Police opposition was centred around the gravity of the offending. The Police allowed for the possibility of discharge even though Mr Rozhdestvensky had received an earlier discharge. However, the Judge isolated the issue and gave it significant weight, which it did not merit.

Discussion

[17]   The key issue in this appeal is the establishment of the direct and indirect consequences of a conviction. With respect to the Judge, she did not articulate any reasons when she said that she was not satisfied that there was a real and appreciable risk of any of the claimed consequences occurring, except to say that there was an

insufficient evidential basis for the claimed consequences. Her failure to give reasons is an error and enables this Court, on appeal, to make its own assessment.

[18]   Before doing so, I will  admit  Mr Van  de Wetering’s  third  affidavit  dated 29 June 2023 as fresh evidence. It sets out Mr Rozhdestvensky’s work activities over the  past  several  months  and  advises  the  Court  that  he  has  been  told  by       Mr Rozhdestvensky about the appeal. Mr Van de Wetering advises the Court he will defer a decision on Mr Rozhdestvensky’s employment pending his appeal. If his appeal is unsuccessful, Mr Van de Wetering says he “will begin an extended search for his replacement.”

[19]   There  are  a  number  of  consequences   of   a   conviction   identified   by Mr Rozhdestvensky. First, he says he is currently trying to lead Air Guard Limited through a pre-IPO process with a view to listing on the Australian ASX. The process involves rigorous due diligence and requires a criminal record certificate from each director. He says that a conviction would likely stall the pre-IPO process. He attaches an extract from a guidance note on the ASX Listing Rules, which refers to obtaining a national criminal history check for a country other than Australia. Mr Rozhdestvensky does not, however, explain how and in what circumstances the pre-IPO process would be stalled if he disclosed a drink driving conviction. Much more information is needed for a Court to accept this as a realistic consequence of a conviction.

[20]   Second, Mr Rozhdestvensky says he is genuinely concerned that a conviction would hamper his ability to travel to a number of overseas countries for business purposes, such as Taiwan, Vietnam and Dubai. In the past he has also travelled to the United States, Saudi Arabia, Australia, Hong Kong and China. He attached a letter from a licensed immigration advisor “detailing the issues [he] will face travelling to the Middle East”. The adviser states, “Mr Rozhdestvensky has asked me to confirm that, if convicted of the DUI charges, he will face severe restrictions in planning future travel to certain Islamic countries for business purposes.” The adviser says, however, that he is not an expert in the immigration laws of other countries but that “being a Muslim myself and coming from an Islamic belief background, I can confirm that a number of Islamic countries prohibit alcohol consumption and therefore any related charges are likely to greatly impair Mr Rozhdestvensky’s ability to obtain long and/or

short-term business visas to these countries”. Again, more is required for the Court to accept this as a realistic consequence of a conviction.

[21]   Third, Mr Rozhdestvensky says he is genuinely concerned that if convicted he would lose his job with Air Guard Limited. He refers to cl 25.5(d) of his contract of employment, which enables his employer to terminate his employment if he is convicted of a criminal offence. As noted, his fellow director and majority shareholder, Mr Van de Wetering, has filed three affidavits. Counsel for the Crown submits that the statements made by Mr Van de Wetering in his first and second affidavits are contradictory and therefore the Court cannot rely on his evidence about possible termination of Mr Rozhdestvensky’s employment.

[22]   I  do  not  see  them,  however,  as   contradictory.   In  his  first  affidavit,   Mr Van de Wetering talks of Mr Rozhdestvensky’s ability to find and secure global opportunities, be at the right place at the right time, and move quickly while inspiring and leading the team in New Zealand. He says Mr Rozhdestvensky will be needed in many places – Middle East, Taiwan and North America. Mr Van de Wetering also talks about the company’s future being severely affected through difficulties with capital raising if Mr Rozhdestvensky “is stained with [a] criminal conviction”. It is in this context that Mr Van de Wetering makes the statement “I need to keep a sharp focus on our future and, if Ilya is not delivering on his current abilities to lead the company, I will pursue his replacement.” In other words, if Mr Rozhdestvensky is restricted in his ability to travel overseas when required or capital raising opportunities are lost because background checks reveal his criminal conviction, Mr Rozhdestvensky’s employment would be jeopardised because he “is not delivering on his current abilities to lead the company.”

[23]   Mr Van  de Wetering  makes it clear in his second and third affidavits that   Mr Rozhdestvensky’s employment as Chief Executive Officer of Air Guard Limited would be terminated if he received a criminal conviction.

[24]   Mr Rozhdestvensky is also the Chief Executive Officer of Rau Bio Limited, a biotechnology company. Thomas Furlong, a director of Rau Bio, has also filed an affidavit in support of Mr Rozhdestvensky’s application for a discharge without

conviction. Mr Furlong is a partner of IceHouse Ventures, a venture capital firm headquartered in Auckland. IceHouse Ventures invested in Rau Bio and Mr Furlong ultimately joined the board of directors. Mr Furlong believes a conviction would have a long-term impact on Mr Rozhdestvensky and on Rau Bio. Mr Rozhdestvensky’s employment agreement with Rau Bio gives the company the authority to terminate his employment   upon   conviction   and,   although   Mr   Furlong    does    not    say Mr Rozhdestvensky’s employment would be terminated (as Mr Van de Wetering does), he does say that a conviction would require that the board of directors consider whether to exercise this authority.

[25]   It sems to me that there is a sound evidential basis for the claimed consequence of termination of employment as Chief Executive Officer of Air Guard Limited in the form of the three affidavits from Mr Van de Wetering. The question is what weight should be given to Mr Van de Wetering’s fears that the company’s business would be affected in a number of ways by Mr Rozhdestvensky’s conviction.

[26]   As noted above, there is no expert evidence about possible restrictions on travel. The letter from the licensed immigration adviser dated 21 March 2022 acknowledges that he is not an expert in the immigration laws of other countries. But it seems that Mr Van de Wetering has relied on the letter from the licensed immigration adviser in forming his own view. The adviser stated:

Mr Rozhdestvensky will no doubt face potential visa delays or visa declines by these countries as he will be required to submit a Certificate of Good Conduct (i.e. no convictions certificate) from New Zealand with any future visa application he may wish to file for these countries. This is likely to impact his business activities such as obtaining and signing joint venture agreements, signing commercial lease agreements and obtaining financial assistance under the Islamic banking system.

[27]   A similar opinion is voiced in a character reference for Mr Rozhdestvensky from Mr Wes Schwalje, the Chief Operating Officer at Tasheen Consulting based in Dubai, United Arab Emirates. He states:

I’m concerned that, if convicted, it will limit his ability to travel to, establish operations in, and seek investment from potential partners in the Middle East. Character checks are frequently used in the region to screen potential business partners, and an operating under the influence conviction verifiable through public record searches could impact his ability to effectively do business in the Middle East.

[28]   Whatever the actual consequences on Mr Rozhdestvensky’s ability to travel overseas may be, Mr Van de Wetering has formed the view that it is not a risk he or the company wants to take. Mr Van de Wetering also refers to his personal experience in capital raising:

In addition to the upcoming company’s capital raising opportunities, venture capital firms will require thorough background checks. I’ve done it myself with all my investments and know this is a norm and standard practice. I strongly believe that if Ilya is stained with [a] criminal conviction not only himself but the company future will be severely affected.

[29]   Mr Furlong, in his  affidavit,  also  talks  about  the  long-term  impact  on  Mr Rozhdestvensky and on Rau Bio. He states:

The company will continue to be engaged in raising more funding and securing commercial agreements in the future. It is standard procedure that potential investors and commercial parties will conduct due diligence on the company and learn about the conviction. As a minimum this will complicate discussions, but in many situations these parties will simply walk away rather than spend the time to understand the circumstances.

[30]Mr Van de Wetering concludes in his third affidavit:

I simply can’t afford any risk of the Chief Executive being held up at borders or the company being judged on his personal character.

It is on this basis that he will terminate Mr Rozhdestvensky’s employment as Chief Executive Officer.

[31]   The Crown submits that the Judge’s assessment of the evidence, including  Mr Van de Wetering’s second affidavit, was justified for the following reasons. First, the statement in the second affidavit was not a clarification of the statement in the first affidavit.   It   was   a   direct   contradiction.   Second,   a   mere   assertion   that   Mr Rozhdestvensky would be replaced is an inadequate evidential basis for assessing the consequences of conviction. Third, there is ambiguity in the evidence.

[32]   With respect, I am of the view that the situation is tolerably clear. Notwithstanding that others may question the sufficiency of the evidence to establish any restriction on Mr Rozhdestvensky’s ability to travel overseas or any adverse effect on company capital raising, they are risks that the majority shareholder in the company does not want to take. Mr Rozhdestvensky may also have grounds to challenge his

dismissal, but that is what Mr Van de Wetering has indicated he will do. My assessment  is,   therefore,   that   there   is   a   real   and   appreciable   risk   that   Mr Rozhdestvensky will lose his job if a conviction is entered against his name.

[33]   The next stage is to assess the proportionality of the consequences. Will the consequences be out of all proportion to the gravity of the offending?

[34]   The Crown submits that, given there was no error in the Judge’s assessment of the risk of any consequences to Mr Rozhdestvensky’s employment, the proportionality assessment was a straightforward exercise. It further submits that in light of the gravity of the offending, even if Mr Rozhdestvensky was dismissed from his employment, the consequences are not out of all proportion to the gravity of the offence.

[35]   I disagree. Mr Rozhdestvensky is the co-founder of Air Guard Limited, an innovative start up venture aimed at changing the way consumers, businesses and society at large are protected in the future from airborne viruses and pollutants. It has received a substantial grant from the NZ Government to enable it to commercialise next generation respiratory protection. Mr Rozhdestvensky himself is seen as well suited for the challenging start up technology sector and very effective in pushing forward complex innovation, team leadership and capital raising. Mr Rozhdestvensky would lose everything he has worked for and the continuing opportunities such innovation offers if he was dismissed as co-CEO of the company. That would be out of all proportion to the gravity of the offence. The Judge assessed the gravity of the offence as moderate. Mr Rozhdestvensky was stopped by Police 200 metres away from his office at around midnight after team drinks. He was stopped because he was driving slowly and weaving within his lane on the road.

[36]   Finally, the Court has to consider its residual discretion as to whether or not to grant a discharge without conviction. The Judge found that Mr Rozhdestvensky’s previous discharge without conviction counted against him in terms of exercising her discretion. However, Courts have on occasions been willing to grant two or more discharges without conviction to the same offender.6

6      Swami v Police, above n 5 at [25].

[37]   In this case, the earlier offence was 16 years ago when Mr Rozhdestvensky was a recently arrived immigrant with a young family. The present offending took place two years ago. Mr Rozhdestvensky has not reoffended subsequently. He has also completed a short eight-week CADS Action programme. He is an active member of the Auckland Hebrew Congregation. He has also applied to do voluntary work for the hospice where his wife died of cancer, leaving him a solo parent of two teenage boys. He  has  supplied  many  references  as  to  his  good  character.  In  light  of Mr Rozhdestvensky’s background and character, I am of the view that the Court’s discretion should be exercised in his favour and a discharge without conviction granted. He is incredibly remorseful.

Result

[38]   The appeal is allowed. Mr Rozhdestvensky’s conviction and fine is quashed, and he is discharged  without  conviction.  The  disqualification  from  driving  for six months remains in place.7

Woolford J

7      Sentencing Act 2002, s 106(3)(c).