Sperry v The King

[2024] NZHC 1956

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CRI-2024-404-000317

[2024] NZHC 1956

BETWEEN

MICHAEL JOHN SPERRY

Appellant

AND

THE KING

Respondent

Hearing:	15 July 2024
Appearances:	P R Marshall for Appellant C Antenan for Crown
Judgment:	16 July 2024

JUDGMENT OF ANDERSON J

[Appeal against suppression]

This judgment was delivered by me on 16 July 2024 at 2.30 pm.

………………………………

Registrar/Deputy Registrar

Solicitors:
Meredith Connell, Auckland

SPERRY v R [2024] NZHC 1956 [16 July 2024]

[1]        Mr Sperry faces six charges of money laundering. He is alleged to have been reckless as to whether or not money received was the proceeds of an offence.1 A two-day trial has been set for 22 July 2024. I was advised that the appellant will seek to adjourn the trial due to disclosure issues, but that issue has yet to be addressed.

[2]        Mr Sperry appeals the decision of Judge J B Berseng in the District Court at Auckland declining:2

(a)An application by Mr Sperry for continued name suppression under    s 200(2) of the Criminal Procedure Act 2011 (CPA), namely that publication of his name would cause extreme hardship to himself, his business associates and family.

(b)An application by Mr Sperry as director of Omega Finance Ltd (OFL) under s 202 of the CPA on the basis of undue hardship to that company in connection with the proceeding.

Charges

[3]       It is alleged that unknown offshore criminals set up a fake webpage claiming to be a broker for long term deposits. The complainant believed he was transferring

$800,000 to  Citibank for the purpose of creating a long-term deposit.  Instead, on  20 April 2023, the money was received into a bank account held by OFL. An unknown person posing to be the owner of Sparco Bank contacted OFL. He is alleged to have asked Mr Sperry to act as custodian of the funds.

[4]       Mr Sperry is a director of OFL. It is said that on 3 May 2023, Mr Sperry made six transfers from the account, totalling $126,358.43. It is alleged that Mr Sperry was reckless as to the provenance of the funds.

1      Crimes Act 1961, s 243(2). Maximum penalty seven years’ imprisonment.

2      R v Sperry [2024] NZDC 11806.

Grounds for seeking suppression orders

[5]       By s 200(1) of the CPA a court may make an order forbidding publication of the name of a person who is charged with, or convicted or acquitted of, an offence. As relevant to this appeal, by s 200(2)(a) a court may make an order if it is satisfied that publication “would be likely to cause extreme hardship to the person charged with…the offence, or any person connected with that person”.

[6]       By s 202 of the CPA, a court that is hearing a proceeding in respect of an offence may make an order forbidding publication of the name, address, or occupation of any person who is connected with the proceedings, or is connected with the person who is accused of the offence. An order can be made only if the court is satisfied that publication would be likely to cause undue hardship to the connected person.

[7]       Applications under ss 200 and 202 involve a two-step process.3 The Court first considers whether it is satisfied that any of the threshold grounds have been established. At the second stage, the Court then considers whether name suppression should be granted in the Court’s discretion.

[8]       At the threshold stage, the Court must be satisfied that “publication would be likely” to result in one of the listed consequences. The word “likely” in this context means “a real and appreciable risk”4 or a “real risk that cannot be readily discounted”.5

[9]       Under s 200(2), “extreme hardship” denotes a very high level of hardship. That is because the word “hardship” on its own means “severe suffering or privation” and because it is greater than “undue” hardship, which is the other threshold used.6 An assessment of whether hardship is “extreme” is contextual. It entails a relative comparison between the contended hardship and the consequences normally associated with a defendant’s name being published. It must be something beyond the ordinary associated consequences.7

3      Robertson v Police [2015] NZCA 7 at [39]; and Beacon Media Group Ltd v Waititi [2014] NZHC 281.

4      Wallis v Police [2015] NZHC 2904 at [22].

5      Beacon Media Group Ltd v Waititi, above n 3, at [17]; and see Huang v Serious Fraud Office

[2017] NZCA 187 at [9]–[10]; and LF v R [2022] NZHC 2547 at [44]–[46].

6      Robertson v Police, above n 3, at [48].

7 At [49].

[10]     In s 202, “undue hardship” has been held to entail “hardship that is disproportionate to the purpose which justifies publication, namely the public interest in the open reporting of court proceedings and the right to freedom of expression”.8 Again, this threshold requires more than “hardship”.

Test on appeal

[11]      The first stage of the enquiry involves an evaluative conclusion as to whether the prescribed threshold is reached. On an appeal against that assessment, the appellate Court is entitled to come to its own opinion about the facts and the law, and if different from the lower Court, may substitute its decision.9

[12]     The second stage involves the exercise of discretion. The appellate function is circumscribed with the issues being whether the Court appealed from erred in law or principle, failed to take into account a relevant consideration, took into account an irrelevant consideration or was plainly wrong.10

The District Court decision

[13]     The Judge considered the  affidavits  in  support  of  the  application  from  Mr Sperry, Mr Sperry’s business partner/co-director in OFL,11 his wife, and an overseas business associate.

[14]     In his reserved decision, the Judge noted that while Mr Sperry had referred to obtaining finance for certain business projects, no evidence had been provided regarding the stage of the financial arrangements and how publication would impact the processes.12

[15]     Regarding the application under s 200, the Judge considered that negative outcomes to Mr Sperry outlined in the affidavit evidence were speculative and that

8      Beacon Media Group Ltd v Waititi, above n 3, at [27].

9      Temple v Police [2023] NZHC 2436 at [16]; and Austin, Nichols & Co Inc v Stichting Lodestar

[2007] NZSC 103, [2008] 2 NZLR 141 at [16].

10     Parker v R [2020] NZCA 502, (2020) 29 CRNZ 536 at [29].

11     For convenience, for the purposes of this judgment I refer to him as Mr Sperry’s “business partner” but acknowledge that this is a somewhat inapt description.

12     R v Sperry, above n 2, at [10].

there was no evidential basis to determine that extreme hardship would likely arise.13 His Honour held that general negative outcomes referred to and the deponents’ personal views were not sufficient.14

[16]     The Judge acknowledged that the test under s 202 is a lower threshold than extreme hardship.15 However, the lack of detail provided by Mr Sperry led the Judge to find that nothing more than hardship in the ordinary sense was established.16

[17]     Having concluded that the prescribed thresholds were not met, the Judge went on to conclude that he would have declined the application in the exercise of his discretion at the second stage on the basis of the public interest in publication.17

Arguments on appeal

[18]Mr Sperry now appeals that decision. Mr Sperry submits that:

(a)The Judge placed insufficient weight  on  the  extreme  hardship  to Mr Sperry through being publicised due to his business interests and indirect extreme hardship to his wife and business partner.

(b)The Judge was wrong to conclude there was no undue hardship to OFL.

(c)The Judge did not put enough emphasis on the distinction between pretrial and post-conviction name suppression.

(d)The recklessness standard of Mr Sperry’s charges makes the hardship distinct from if the charges involved intentional involvement in a criminal enterprise.

13 At [63].

14 At [64].

15 At [67].

16 At [68].

17 At [73].

Section 200 — extreme hardship?

[19]     Mr Sperry is 62 and has been self-employed since leaving university in 1985. He is married and has two adult children and grandchildren.

[20]      The affidavits outline that Mr Sperry and his business partner have been working with iwi towards developing marae-based social housing projects for many years. In particular, there is a proposed 60-house project at Tauwhare and another substantial project at Waharoa. With a view to financing these projects they purchased an existing company with a financial service provider licence, renamed OFL in 2021.

[21]     There is also evidence that Mr Sperry and his business partner have been involved through another entity in a proposed Auckland waterfront stadium development. They say they are “one of four groups” being considered for the initial stages of that development.

[22]     Mr Sperry says that publication of his name and the nature of the charges would result in a loss of credibility within the finance industry. He describes the current business projects he is involved in as a culmination of his professional lifetime’s work. He considers he would not be able to be connected to the projects and that would likely see the end of them, given that he has been the main OFL representative. He emphasises that the financial sector is a field built on reputation and he would be at risk of losing both his ventures and reputation in a long-established career in that industry.

[23]     Mr Sperry’s business partner says he would be unable to distance himself from Mr Sperry if Mr Sperry’s name was published due to his close working relationship. He also refers to loss of mana and the impact on him of being unable to continue with the projects as the likely outcome of publication.

[24]     In addition, Mr Sperry’s wife describes Mr Sperry as being withdrawn, irritable and hard to live with. She says he has been having trouble sleeping and is angry with what he has had to cope with and which she says is having a major impact on both of them.

[25]Mr Sperry relies upon R v BGE (No 2)18 and H v R.19

Discussion

[26]     In my view the Judge was correct in his conclusion that the high test for extreme hardship has not been made out. The Judge was correct to point to the lack of detailed and up to date information on the consequences for the business ventures. The affidavits make a number of assertions as to Mr Sperry’s innocence but are light on support for specific consequences of publication reaching the threshold standard. This undermines the contention of the likelihood of extreme hardship.

[27]     The most recent information in the affidavits relating to the progress of the social housing projects at Tauwhare and Waharoa relates back to initial feasibility studies undertaken in 2021, and a discharge consent for the former project in January 2022. The completion report for feasibility of the Tauwhare project records that Kainga Ora funding would be required to build the homes.

[28]     The Judge was correct to say that he would expect an update on the status of these projects particularly given that Mr Sperry’s own affidavit refers to an intention to restart them in 2024. While Mr Sperry referred to OFL having obtained overseas finance, there are no specifics as to the stage of the finance arrangements, and on how publication of Mr Sperry’s name would now impact that process.

[29]     Similarly, there is no evidence from Mr Sperry as to any progress made on the specific waterfront proposal from September 2023. There is a lack of detail provided around Mr Sperry’s interests’ current status on funding that project and the current status of the proposal with Council. That is in the context where the affidavit exhibits suggest that progress towards an initial funding agreement with the entity put forward by Mr Sperry and his business partner was 95 per cent complete as at June 2023.

[30]     The Judge was correct that the negative outcomes are speculative without anything more tangible in evidence. I agree with the Judge that otherwise, the consequences relied upon go no further than the ordinary consequences on a person’s

18     R v BGE (No 2) HC Hamilton CRI-2005-419-122, 1 June 2006.

19     H (CA134/2022) v R [2022] NZCA 220.

business from facing charges of the present nature. Something more than loss of employment or livelihood is usually required.20

[31]     Mr Sperry relied heavily on H (CA134/2022) v R, where the Court of Appeal concluded that a well-known entertainer ought to maintain name suppression pending trial on charges of money laundering associated with an alleged large-scale drug syndicate.

[32]     The Court of Appeal emphasised that music was more than the appellant’s business, but his vocation.21 The Court was satisfied as to the serious consequences on his ability to continue that vocation with his reputation impacted by the charges. There was also evidence of current commitments the defendant would be unable to fulfil.22 This evidence was not challenged by the Crown. The Crown’s stance was that loss of the appellant’s career was not extreme hardship, which the Court of Appeal rejected.

[33]     The Court was influenced by the seriousness of the charges and the fact that the trial was almost a year away, with suggestions that that fixture was likely to be deferred. During this time the appellant would not be able to comment meaningfully yet the connotation would be that he was involved in an organised criminal group.23 The Court was also influenced by likely interest from the media given the appellant’s profile in circumstances where the appellant’s reputation was of critical importance.24

[34]     Each case is fact specific. Here the evidence is underwhelming as to the counterfactual facing Mr Sperry. I would not characterise Mr Sperry in the same category as the entertainer likely to lose his whole career and vocation if there is publication of the allegations of the charges pending conclusion of trial. At present that trial commences next week. Even if it is adjourned, there would not be the very lengthy delay associated with the H (CA134/2022) v R case. A proper reporting of the

20     Stephens v R [2021] NZHC 1902 at [26]. 21 H (CA134/2022) v R, above n 19, at [36]. 22 At [40].

23 At [44].

24 At [43].

charges here would be that they relate to recklessness not intentional money laundering.

[35]     While it is correct that a combination of factors can result in a finding of extreme hardship (as in BGE), there is not the evidence here of a cumulative effect meeting  the  extreme  hardship  threshold  in  this  case.  The  consequences  for   Mr Sperry’s wife of dealing with Mr Sperry being under stress are no more than the ordinary consequences of publication.

[36]     This is not a situation, as in BGE, where there is a particular health issue identified by a connected person. There, the defendant’s father was suffering from a debilitating disease, and there were specific concerns for his wife who had only recently given birth and was looking after their young children.25 Nor do I consider the consequences for Mr Sperry’s business partner and OFL are any more than the ordinary consequences of publication.

Section 202 — undue hardship?

[37]     Undue hardship is a lower threshold than extreme hardship. However, like the Judge, I am not satisfied that this threshold is met for consequences to OFL.

[38]     There are no specifics of projects apart from the housing projects. As I have said, the consequences of publication have not been established because of lack of updating detail. It is correct that OFL operates in an industry where reputation is very important and there may well be an impact. But I do not consider this as disproportionate to the public interest in open reporting or going beyond the ordinary consequences on a company where its director faces serious charges associated with the business it operates.

25     R v BGE, above n 18, at [23].

Discretion

[39]     If the thresholds had been met, there is the question whether open justice should yield. As the Court of Appeal has said, the balance must clearly favour suppression.26

[40]     Because I have concluded the threshold was not met, this is very much a back-end issue. Moreover, it falls to be considered against the higher appeal threshold of an appeal against a discretion.

[41]     The fact that Mr Sperry is alleged to have engaged in reckless, rather than intentional money laundering is relevant to the seriousness of the offending, which is a factor to consider in the exercise of the discretion. So too is the presumption of innocence.

[42]     It is plain that the Judge was conscious of the latter, given that he set out in his judgment the submissions on behalf of Mr Sperry as to the unproved allegations against him.27 Putting that to one side, I consider the Judge’s conclusion to be correct.

[43]     I agree with the Judge that there is a considerable public interest in knowing the identity of those charged with (even reckless rather than intentional) money laundering and in receiving the proceeds of a scam. That public interest is enhanced, not reduced, by the fact that Mr Sperry holds a licence as a financial service provider. The lack of concrete up to date evidence on specific consequences would be relevant here also. The balancing process does not clearly favour suppression.

[44]      As the Judge observed, OFL and the other companies with which Mr Sperry is associated have taken a “business as usual” approach. The Judge was right to suggest that steps could be taken to mitigate reputational damage.

26     D (CA443/2015) v Police [2015] NZCA 541 at [12]; citing Lewis v Wilson & Horton Ltd [2000] 3 NZLR 546 (CA) at [43].

27     R v Sperry, above n 2, at [43].

Result

[45]     The appeal is dismissed. The appellant did not intimate he would seek interim orders in that event.28

Anderson J

28     Criminal Procedure Act 2011, s 292.