Ryder v New Zealand Customs HC Auckland CRI-2011-404-238

[2011] NZHC 1954

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI-2011-404-238

BETWEEN  MARK STEPHEN RYDER Appellant

ANDNEW ZEALAND CUSTOMS Respondent

CRI-2011-404-239

AND BETWEEN            RYDERS CUSTOMS AND FORWARDING LIMITED Appellant

ANDNEW ZEALAND CUSTOMS Respondent

Hearing:         29 November 2011

Counsel:         C Newton for the Appellant

S Haszard for the Respondent

Judgment:      5 December 2011

RESERVED JUDGMENT OF ELLIS J

This judgment was delivered by me on 5 December 2011 at 3 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:      Crown Solicitors, PO Box 2213, Auckland 1140

Counsel:       C Newton, PO Box 76-616, Manukau

RYDER V CUSTOMS HC AK CRI-2011-404-238 5 December 2011

[1]      Mr Ryder is a customs broker.  More particularly, he is the director of Ryders Customs   And   Forwarding   Limited,   a   company   that   operates   a   Customs Computerised Entry system whereby import and export entries are able to be completed electronically and submitted to Customs for clearance.  In order to operate such a system, registration under the Customs and Excise Act 1996 (the Act) is required.  A registered person receives a declarant code and a Unique User Identifier Code (UUI), both of which are required to be used when completing import and export entry forms.

[2]      Mr Ryder appeals against his conviction and sentence by Judge Moses in the District Court on 38 charges under s 203(1)(b) of the Customs and Excise Act 1996 (―the CEA‖).   Each of the charges related to the making of entries required under that Act which  were erroneous in  a material particular.   Each  of  the entries in question involved the falsifying the name of the relevant exporter.

[3]      Although, as will be evident from the entituling of this judgment, Mr Ryder‘s company was also convicted and sentenced for the same charges and also filed an appeal  Ms  Newton  advised  that  that  was  no  longer  pursued.    That  is  because Mr Ryder fully accepts responsibility for both his and the company‘s offending1 but, largely as a result of events subsequent to his sentencing, he now seeks a discharge without conviction for himself under ss 106 and 107 of the Sentencing Act 2002 (―the SA‖).   The possibility of discharge without conviction was not raised before the learned District Court Judge and does not appear to have been considered by him.2

Background

[4]      Between  29  May  2008  and  1  May  2009,  an  employee  of  Mr  Ryder‘s

company completed 38 export entries in which AA Japanese Parts was named as the exporter.   The employee knew that the true exporter was Watan Auto Parts but it

1 Both Mr Ryder and the company pled guilty to all charges.

2 For the reasons recently given by Keane J in Whiteman v NZ Customs Service HC Auckland CRI-

2011-404-70, 21 June 2011 at [16] – [19] this appeal is not constrained by the circumstances as they existed at the time of sentence.

appears that for reasons of expediency made the transposition.3     Mr Ryder subsequently submitted these entries to Customs without verifying them against the shipment details.

[5]      Mr Ryder and his company were not legally represented when they entered guilty pleas, nor when they appeared for sentencing in the District Court.

[6]      In sentencing Mr Ryder the learned District Court Judge said that he did not regard Mr Ryder‘s actions as being at the serious end of this category of offending, but said that matters of particular concern were the length of time over which the offending occurred, and the repetition of the offending.  He sentenced Mr Ryder to

$100  per  offence  ($3,800)  and  Court  costs  of  $130  in  respect  of  each  charge

($4,940).4

[7]      After sentencing, Mr Ryder sought legal advice and applied under s 75 of the Summary Proceedings Act 1957 for a re-hearing.  It appears he wished to challenge both his conviction and sentence, principally for reasons of parity with his employee, who had been sentenced to 120 hours of community work after pleading guilty to a representative charge under s 203(4) of the Act and to one further charge relating to her creation of a document to cover up her earlier offending.   The rehearing application was determined by Judge Moses on 7 June 2011.  The application was, in

all material respects, declined by the Court.5

[8]      Following  this  further  decision  on  14  July  2011,  Mr  Ryder  received notification from the Customs Service that as a result of his offending consideration was being given to revoking his registration and UUI.  Under s 135(1) of the Act the

Chief Executive may cancel or suspend a user‘s registration on that ground.

3 The employee.

4  The company was sentenced to $200 per offence ($7,600) and Court costs of $130 per charge

($4,940).  The total of the fines and costs imposed was $8,740 against Mr Ryder and $12,540 against the company: New Zealand Custom Service v Ryder DC Manukau CRI-2010-092-3708, 26 May 2010.

5 The application was allowed only to the extent of amending the sentence imposed to include only one set of Court costs to be paid by each of the appellants, meaning that Mr Ryder‘s total fine and costs amounted to $3,930 and the Company‘s total fine and costs were $7,730: New Zealand Customs

[9]      It is the prospect of losing his registration and UUI that has now prompted Mr Ryder to appeal Judge Moses‘ decision insofar as it relates to him.  His grounds for doing so are that the potential loss of his UUI means that the consequences of a conviction for him will be out of all proportion to the gravity of his offending.   He says that if his UUI is cancelled he will not be able to work as a customs broker.  He says that because he did not realise that his UUI was in jeopardy the question of a discharge without conviction was not raised in the District Court.

[10]     Although other grounds in support of a discharge without conviction were advanced by Ms Newton in her written submissions they were not strictly relevant to the assessment the Court is required to make under ss 106 and 107 and they were, quite  rightly,  not  really  pursued  by  her  before  me.6       The  central  focus  of Ms Newton‘s  submissions  was  therefore  the  potential  effect  of  a  conviction  on Mr Ryder‘s UUI.

[11]     For New Zealand Customs, Mr Haszard submitted that:

(a)      The potential cancellation of Mr Ryder‘s UUI is not a matter that ought to be determined by a sentencing Court as this would interfere with the statutory processes under the CEA;

(b)In the alternative, a discharge without conviction is not warranted because the consequences of a conviction are not out of all proportion to the gravity of the offending.

[12]     Because the potential cancellation of Mr Ryder‘s UUI was not at issue in the District Court Mr Haszard also applied to file further evidence pursuant to s 119(3) of the Summary Proceedings Act 1957.  That evidence (in the form of an affidavit

from Terry Brown, the New Zealand Customs Service Client Services Manager)

6  These grounds were that (a) Mr Ryder was prejudiced because there had been issues with the disclosure made by New Zealand Customs and the lack of sentencing submissions made available to them before the sentencing hearing (b) Mr Ryder had been treated differently from his employee and (c) he had cooperated fully with the Customs Service, and had been lulled by them into thinking that because of his previous excellent relationship with them his ability to carry on business was not in jeopardy.

explained  the relevant  legislative regime and  the policies  underlying it.    In  the circumstances Ms Newton quite properly did not oppose the application and it was granted accordingly.

The law: discharges without conviction

[13]     Section  11  of  the  SA  requires  the  Court  to  consider  discharge  without conviction before imposing a sentence.   The discretion to discharge without conviction is bestowed by s 106 of the Act, which deems such a discharge to be an acquittal.

[14]     The s 106 discretion is guided (but not determined) by s 107, which provides a ―gateway‖ through which any discharge without conviction must pass.7   Only if the Court is satisfied that the disproportionality test in s 107 is met, may it then move on to consider s 106.  Section 107 provides:

107 Guidance for discharge without conviction

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

[15]     Until recently the leading authority on the operation of ss 106 and 107 has been the Court of Appeal‘s decision in R v Hughes.8   I do not propose to rehearse the dicta from that decision in any detail as they are well understood.  I do record and acknowledge,  however,  that  the  decision  in  Hughes  has  now  been  somewhat modified by the Court of Appeal‘s recent decision in Blythe v R.9 Although in that decision the Court endorsed the three step process mandated in Hughes,10 it did not agree  that  the  disproportionality  test  under  s  107  requires  consideration  of  all

relevant circumstances of the offence, the offending and the offender, and the wider

7 R v Hughes [2008] NZCA 546, [2009] 3 NZLR 222 at [10].

8 Supra.

9 Blythe v R [2011] NZCA 190, [2011] 2 NZLRN 620.

10 Blythe at [8] – [9]. That three stage process is (1) identify the gravity of the offending with reference to the

particular facts of the case (2) identify the direct and indirect consequences of a conviction and (3) determine whether those consequences of conviction would be out of all proportion to the gravity of the offending.

interests of the community (including the factors required to be taken into account under ss 7, 8, 9 and 10 of the Sentencing Act).  In that respect the Court said:

[11]     That appears partly to misstate the requirements of the s 107 disproportionality test.  The aggravating and mitigating factors set out in s 9 of the Sentencing Act, and those listed in s 9A ... are obviously relevant to

‗the gravity of the offence‘. But the content of ss 7, 8 and 9 is not. ...

[12]      As was pointed out in Hughes, the Court must first consider whether the disproportionality test in s 107 has been met.  Only if it has been may the Court proceed to consider exercising its discretion to discharge without conviction under s 106. It is at that stage – when exercising the residual discretion under s 106(1) and in deciding whether further orders are required under s 106(3) – that the purposes and principles of sentencing set out in ss 7 and 8 of the Sentencing Act, the aggravating and mitigating factors listed in ss 9 and 9A (as we have pointed out these were relevant to the s 107 disproportionality test), and the matters dealt with in ss 10 and 10B must all be taken into account.  That is because all those sections apply, not only in sentencing, but also in ―otherwise dealing‖ with an offender.  In that respect, we agree with Hughes.

(footnotes omitted)

[16]     Accordingly it appears that after Blythe, the only relevant matters at stage one of the s 107 inquiry (determining the gravity of the offending) are the facts of the offending itself (i.e. aggravating and mitigating factors relevant to the offending but not the offender) and the views of the victim.

Discussion

[17]     In terms of assessing the gravity of Mr Ryder‘s offending,  I accept that ordinarily his culpability would be viewed as being at the lower end of the relevant scale; there was no dishonesty or deliberate financial gain; he was merely careless.

[18]     That said, however, it is here that the policy and purpose of the CEA and the evidence of Mr Brown assume some importance.

[19]     More particularly, as Mr Brown says, the effective functioning of the CEA and  the system  established under it  centrally depends  on  voluntary compliance, accurate record-keeping and self-monitoring by people given positions of privilege under it, such as Mr Ryder.  The integrity of our customs system (and New Zealand‘s

international standing in matters of border control) is dependent on people who are entrusted with UUIs using them carefully and responsibly.

[20]     So  for  these  reasons  I  think  care  must  be  taken  not  to  downplay  the seriousness of Mr Ryder‘s offending in the context of this wider setting, namely the integrity and efficiency of New Zealand‘s customs regime. Against that background, and given (as the learned District Court Judge noted) the extended period of the offending and the repetition involved, the seriousness of his offending can fairly be classed as moderate.

[21]     In terms of the consequences for Mr Ryder of a conviction, I accept that these would be serious in the event that his UUI is revoked.  I record and take into account the   possible,   less   direct,   effects   on   his   company‘s   ability   to   operate   and (consequently) on its employees.

[22]     Although the possible consequences are serious, however, they remain at this point contingent.  In that respect the comments of Hammond J in Liang v Police11 seem apt, at least by analogy:

[17]  … Where the conviction will result in an absolute bar to the occupation that may carry extra weight with the Court.  … If there is an independent body   charged   with   determining   the   suitability   of   individuals   for employment, the Court may be more ready to enter a conviction, it being of the view that it is in the public interest that that body is best able to make a decision with the benefit of full disclosure of the fact.   The fact that the conviction may act as a barrier to gaining entrance to an occupation is not a determinative factor — it is merely a factor to be considered in the balancing exercise.

[23]     As well, there is some force in Mr Haszard‘s submission that care should be taken  by  the  Courts  that  they  do  not  usurp  the  function  of  registration  and disciplinary bodies by routinely granting s 106 discharges.12   That is a consideration

that must be relevant to the exercise of the Court‘s residual discretion under s 106,

11 Liang v Police HC Wellington AP38/02, 16 April 2003.

12 R v Rollo CA1/04, 8 October 2004 at [36].

and may also be relevant to the s 107 weighing exercise (as to which see the discussion at [25] below).13

[24] Conversely, of course, the mere fact that there is a separate statutory process that will be engaged both before and after any decision is made about Mr Ryder‘s UUI does not relieve the Court of its obligation to consider whether, on the merits, a discharge without conviction should be granted. To that extent I do not accept unequivocally Mr Haszard‘s first submission (recorded at [11] above).

[25]     In the present case, it seems to me to be relevant that even though Mr Ryder‘s UUI is plainly in jeopardy, important protections exist for him under Part 11 of the CEA. There is a process to be followed and, of course, a right to be heard before any decision to revoke is made. And if Mr Ryder‘s UUI is revoked he then has a right of de novo appeal to the Customs Appeal Authority (―CAA‖).  The CAA is a judicial authority14  consisting of a District Court Judge or barrister and solicitor of not less

than seven years experience in practice.15   It has all the usual features and powers of

a court of general jurisdiction,16  and also has a wide power to receive evidence, whether or not otherwise admissible,17 as well as the power to investigate.18   In my view the existence of these protections necessarily has the effect of diminishing the consequences of a conviction for Mr Ryder.

[26]     In terms of the third step in the s 107 inquiry, then, I do not think it can be said that the consequences of a conviction for Mr Ryder are out of all proportion to the gravity of his offending. The ―out of all proportion‖ threshold is a high one. As I have  said,  the  offending  was  not  inconsequential  and  the  consequences  of  a conviction are not only contingent but will be controlled by a thorough and fair process.  Mr Ryder has not therefore passed through the s 107 gateway.  There is no

need to consider the Court‘s residual discretion under s 106.

13  In that respect I note Mr Haszard‘s advice that this has, indeed, historically been the case with convictions under the Act.  The cases referred to were Betham (March 2005), Johns (July 2005), and Stratton (August 2006), each of which involved discharges without conviction.

14 Section 253.

15 Section 244(3).

16 Section 259.
17 Section 260.

18 Section 261.

[27]     So while I have sympathy for Mr Ryder‘s position and the anxiety he now faces I have no doubt that the Chief Executive can and will take into account the fact that Mr Ryder fully and immediately took responsibility for his offending and of the other mitigating factors such as the absence of any deliberate dishonesty of financial gain.

[28]     The appeal is dismissed accordingly.

Rebecca Ellis J