Sun v Police
[2022] NZHC 1521
•29 June 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CRI-2022-404-000152
[2022] NZHC 1521
BETWEEN YIXUAN SUN
Appellant
AND
NEW ZEALAND POLICE
Respondent
Hearing: 27 June 2022 Appearances:
I M Brookie for Appellant T H Stuart for Respondent
Judgment:
29 June 2022
JUDGMENT OF HINTON J
This judgment was delivered by me on 29 June 2022 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Counsel/Solicitors:
I M Brookie, Auckland
Meredith Connell (Office of the Crown Solicitor), Auckland
SUN v POLICE [2022] NZHC 1521 [29 June 2022]
[1] Ms Sun was convicted of providing an unregistered financial service1 by Judge P J Sinclair at the Auckland District Court on 14 April 2022 and discharged. The Judge declined to grant a discharge without conviction.
[2] Ms Sun now appeals against conviction and sentence on the grounds that a discharge without conviction should have been granted but relying on new evidence which she seeks leave to file.
Background
[3] Ms Sun was investigated as part of Operation Brookings, which targeted a money laundering syndicate. The syndicate used cryptocurrency trades, informal value transfer services and the purchase of high value assets to conceal the proceeds of criminal offending. A man named Mr Lu is said to have run the syndicate and Ms Sun was in a romantic relationship with him at the time of her offending.
[4] Sometime in April or May 2020, Mr Lu offered Ms Sun a commission if she could find individuals willing to exchange New Zealand dollars for Chinese Renminbi. She advertised this service on WeChat (a social media application). Subsequently on 7 May 2020 an individual answered the advertisement. Ms Sun organised for this person to meet with Mr Lu to exchange RMB 50,000 for NZD 10,000 in cash. This exchange was carried out between Mr Lu and the individual on 8 May 2020.
District Court decision
[5] Judge Sinclair first assessed the seriousness of the offending. The offence itself did “not sit at the high end of the criminal justice scale”.2 However, the Judge did take into account the strong public interest in ensuring strict compliance with financial markets legislation and the fact that the interest is even stronger for those who work in the financial accounting sector, as Ms Sun does.
1 Financial Service Providers (Registration and Dispute Resolution) Act 2008, s 11(2). Maximum penalty: one year’s imprisonment or $100,000 fine.
2 R v Sun [2022] NZDC 6876 at [6].
[6] Judge Sinclair considered that Ms Sun had a limited role as a “middle person” and the offending was unsophisticated.3 The Judge also noted Ms Sun’s previous good character, remorse, and low risk of reoffending. She took into account Ms Sun’s full cooperation with police and her agreement with the Crown to testify against Mr Lu. Ms Sun also made an early guilty plea. The pre-sentence report writer noted that Ms Sun was remorseful, had no rehabilitative needs and a low risk of reoffending.
[7] Therefore Judge Sinclair found that the overall gravity of the offending was at the “lower end of the spectrum”.4
[8] The Judge then turned to the direct and indirect consequences of a conviction. Ms Sun is a management (non-chartered) accountant with an Auckland-based construction company. First, the Judge found that a conviction would not jeopardise her employment at her current firm based on the evidence of her manager, Mr Guo.
[9] Second, the Judge considered whether the conviction would prevent Ms Sun from fulfilling her aspiration to become a chartered accountant. Referring to Singh v Police, she noted Chartered Accountants Australia and New Zealand (CA ANZ)5 should be aware of Ms Sun’s offending if she were making a membership application to it.6 She further concluded that the conviction would not necessarily preclude Ms Sun from becoming a chartered accountant given her particular circumstances, again referencing Singh.
[10] Third, the Judge held that the conviction would not prevent Ms Sun from gaining other employment in the finance industry because employers could look behind the conviction especially where the penalty has been minimal, noting that Ms Sun’s current employer was willing to continue to employ her.
[11]Balancing the two limbs of the test, the Judge concluded as follows:
3 At [8].
4 At [13].
5 The New Zealand Institute of Chartered Accountants (NZICA) was succeeded by Chartered Accountants Australia and New Zealand in 2014.
6 Singh v Police HC Auckland CRI-2012-404-000420, 11 April 2013.
[29] I conclude a conviction would not undermine your current employment or your future ability to obtain other jobs. It may possibly negatively affect your career progression and application to be a chartered accountant, but you would not be barred from applying to be a chartered accountant by reason of a conviction and the institute should not be deprived of information that is highly relevant to that determination.
[30]So, the application for a discharge without conviction is declined.
[12]The Judge then convicted and discharged Ms Sun.
The appeal
[13] Mr Brookie submits that had Judge Sinclair known (which Ms Sun herself did not) that Ms Sun would lose her employment following conviction, the test under s 107 of the Sentencing Act 2002 would have been met.
[14] Mr Brookie says that Mr Guo had been under a mistaken understanding that a conviction under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (the Act) would not constitute a “criminal record” for Ms Sun. Following Ms Sun’s conviction, Mr Guo advised her that he had spoken to the Board and shareholders of the company, who said that because Ms Sun now had a criminal record, she would not be able to continue working there. Her hours have been reduced from 40 per week to just eight, and her employment will be terminated by 21 October 2022. Mr Guo and Mr Brookie confirmed that if the appeal is successful Ms Sun will retain her employment. Mr Brookie submits that this change in circumstances significantly increases the seriousness of the consequences.
[15] Second, Mr Brookie submits that even putting aside the change in events, the District Court erred in its evaluation of the consequences of conviction to Ms Sun on her career in general. The consequences should properly have outweighed the low gravity of the offending. The gravity of offending was extremely low, as reflected in the ultimate sentence of conviction and discharge. The Judge erred when she stated that prospective employers were “capable” of looking past the conviction because the test is whether there is a real and appreciable risk that Ms Sun will be hired because of her conviction. This requires that future employers do in fact look past the conviction. Mr Brookie submits instead they will get the impression that the offending related to her present job when it did not, and refuse any application at face value.
[16] For the Crown, Mr Stuart reiterates the public interest in compliance with financial markets legislation. He submits the consequences, even as presented by the fresh evidence, are not out of all proportion to the offending. Ms Sun can find another similar job and has not presented evidence that she has been rejected from similar roles. He says the Judge was right to conclude that CA ANZ would be able to make its own decision based on all of the available facts, including relevant mitigating factors, with regard to any application Ms Sun might make to become a chartered accountant.
Law
[17] An appeal against a refusal to grant a discharge without conviction is both an appeal against conviction and sentence.7 The appellate court must make its own assessment of an application’s merits.8 However, the appellant must show there has been a “material error” leading to a miscarriage of justice.
[18] Section 106 of the Sentencing Act 2002 gives the Court discretion to discharge without conviction. It is subject to the s 107 test:
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.
[19] Three factors must therefore be considered: (a) the gravity of the offence; (b) the direct and indirect consequences of a conviction; and (c) whether those consequences are out of all proportion to the gravity of the offence.9 The assessment of the first factor is influenced by aggravating and mitigating factors that apply to the offender. There must be a “real and appreciable risk” of the consequences in the second factor occurring.10
[20] Section 11 of the Act, under which Ms Sun was convicted, provides that all financial service providers must be registered and that they must be part of a dispute resolution scheme. It is an offence to knowingly breach these requirements.
7 Jackson v R [2016] NZCA 627, (2016) 28 CRNZ 144 at [7]–[8].
8 Austin, Nichols & Co Inc v Stitching Lodestar [2007] NZSC 103; [2008] 2 NZLR 141.
9 R v Hughes [2008] NZCA 546, [2009] 3 NZLR 222 at [8].
10 DC (CA47/2013) v R [2013] NZCA 255 at [43].
Discussion
Fresh evidence
[21] Ms Sun seeks to adduce new evidence on appeal. This evidence consists of her own affidavit dated 17 May 2022 and an affidavit of Mr Guo dated 17 May 2022. These two affidavits outline the change in circumstances since the District Court decision, namely that as a result of the conviction Ms Sun will no longer be able to retain her employment. The Crown accepts that the affidavit of Mr Guo is fresh evidence, appropriately admissible on appeal.
[22] The test for admitting evidence on appeal is whether the evidence is fresh and credible, and whether overall it is in the interests of justice for it to be admitted.11 I am satisfied the affidavits of Ms Sun and Mr Guo are fresh because they canvass matters that had not arisen at the time of the District Court hearing, and that show a misunderstanding on Mr Guo’s part at that earlier time. I am also satisfied it is in the interests of justice that they be admitted because the change in circumstances forms the basis of Ms Sun’s appeal.
[23] Ms Sun also seeks to adduce an affidavit from Ms Man dated 26 May 2022. Ms Man works as a financial accountant and is involved in hiring people to her team. Her affidavit relates to Ms Sun’s employability in the accounting industry generally with reference to her position that she would not hire someone with a conviction such as Ms Sun’s. The Crown opposes the application to admit the affidavit of Ms Man in support of this appeal. This is evidence that could have been adduced at trial where the issue of employability generally was at issue. I note that the Crown questions the credibility of the affidavit given Ms Man knows Ms Sun personally to some degree. In any event Ms Sun’s potential difficulties in obtaining further employment are clear on the face of what has happened to her current employment. Further the observation that Ms Sun would struggle to get another job in accounts with such a conviction is contained in the affidavit of Mr Guo dated 17 May 2022. Apart from not being fresh evidence, Ms Man’s affidavit is unnecessary in that regard. It is inadmissible.
11 R v Bain [2004] 1 NZLR 638 (CA) at [22]–[27], affirmed on appeal in Bain v R [2007] UKPC 33, (2007) 23 CRNZ 71 at [34].
Discharge without conviction
[24] The judgment of Judge Sinclair was considered and well-reasoned. I agree with it entirely on the evidence then before the Judge.
[25] The fact Ms Sun would keep her job was clearly material to the Judge’s decision. That fact has proven to be incorrect. Mr Guo is a 50 per cent shareholder in Ms Sun’s employer and is her manager. His affidavit sets out that he did not originally realise a conviction under the Act amounted to having a “criminal record”. Once informed that was the case, Mr Guo had to inform the other shareholder who made it clear that in terms of company policy the Board would not tolerate an employee with a criminal record. Ms Sun’s hours at the company have been reduced to eight hours per week and her employment will be terminated on 21 October 2022. Mr Guo confirms that if Ms Sun is not convicted, she will retain her employment.
[26] By no fault of the Judge, the judgment now contains a material error of fact due to the change in circumstances. I record some scepticism surrounding the “phase- out” employment dismissal. It seems odd that the company could not employ someone with a criminal record, yet Ms Sun remains on reduced hours until October. Mr Brookie said he had queried that with Ms Sun and understood this was a “soft landing” approach. That also makes little sense as suddenly reducing a valued employee to no more than eight hours per week is hardly a “soft landing”. However, although Mr Stuart adopted my concerns in his oral submissions, in written submissions the Crown did not suggest any irregularity in Mr Guo’s evidence and they accepted the evidence could be admitted without requiring Mr Guo for cross- examination. Therefore, taking the evidence at face value, Ms Sun has now effectively lost her job. If this evidence had been before Judge Sinclair, based on a careful reading of her judgment, I consider her assessment would have favoured discharge without conviction. For the same reasons, I also accept that if an already trusted employee loses employment in the career for which she has trained (in China and New Zealand), then she would similarly struggle to obtain any equivalent employment elsewhere.
[27] I am not persuaded by the submission that a discharge without conviction should be granted on the basis that Ms Sun would struggle to become a chartered
accountant if a conviction were entered. In my view that counts against Ms Sun’s appeal. I reiterate the comment of Judge Sinclair that “it is important and appropriate that CA ANZ are aware of your offending”.12 I am concerned that if I were to grant the discharge without conviction, CA ANZ would not be aware of Ms Sun’s actions. For that reason, and with the consent of Ms Sun, I am ordering that a copy of Judge Sinclair’s judgment and this judgment be sent by Mr Stuart to CA ANZ as soon as practicable with a covering letter explaining that the judgments have been provided so they are aware of the charge and reasons for the discharge should Ms Sun apply for membership in the future. I also impose a condition on Ms Sun to provide these judgments to CA ANZ as part of any application by her.
[28] With that concern abated I am satisfied that the consequences of conviction would be out of all proportion to Ms Sun’s offending, and I grant a discharge without conviction.
Order
[29]I make orders in terms of [27] above.
Result
[30]The appeal is allowed.
[31]The discharge without conviction is entered.
[32]Ms Sun’s conviction is quashed.
Hinton J
12 R v Sun, above n 2, at [23].
Addendum
[33] I am concerned, having read Ms Sun’s interview in relation to her proposed evidence against Mr Lu, that she was at best very gullible in her dealings with her then boyfriend and perhaps over-impressed by his apparent wealth. I accept that, as the interview relates to Mr Lu’s wider dealings and only to a very minor degree to the transaction with which Ms Sun is charged, the transcript is not relevant. But Ms Sun needs to choose her friends much more scrupulously in future. She cannot afford to be closely associated again with someone facing charges such as Mr Lu is in this matter.
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