New Zealand Customs Service v Zhu [2022] NZDC 785 (20 January 2022)

Last Updated: 16 November 2023

IN THE DISTRICT COURT AT AUCKLAND I TE KŌTI-Ā-ROHE KI TĀMAKI MAKAURAU

CRI-2018-004-010554

[2022] NZDC 785

NEW ZEALAND CUSTOMS SERVICE

Prosecutor v

HUA YI ZHU Defendant

Hearing:	20 January 2022
Appearances:	D Dow for the Prosecutor M Dyhrberg QC for the Defendant
Judgment:	20 January 2022

NOTES OF JUDGE E M THOMAS ON SENTENCING

The defendant is sentenced to 3 years imprisonment.

REASONS

The offending

[1] Mr Hu on behalf of Zhong Ze Group New Zealand Limited imported cigarettes from China. They would be hidden in metal cabinets within shipping containers. The

NEW ZEALAND CUSTOMS SERVICE v HUA YI ZHU [2022] NZDC 785 [20 January 2022]

cabinets would be declared in the necessary import documentation. The cigarettes would not. That way no duty would be paid on the cigarettes. Mr Hu sold the cigarettes for millions of dollars. Around 19 million cigarettes were imported, the duty payable on those cigarettes would have been or has been estimated to be $18 million.

[2] On 17 October 2018 Customs officers conducted a covert search of two storage units. They found cigarettes hidden in cabinets. Each cabinet had a piece of paper stuck on the outside which recorded the brands and quantities inside each cabinet. On 18 November 2018 Customs searched a container imported by Zhong Ze. They found 340,000 cigarettes contained within 12 metal cabinets stacked at the rear of the container. On 20 November Customs searched premises, vehicles and storage units associated with Mr Hu. They found another one and a half million cigarettes, 690 containers, some still containing cigarettes, and over $4 million in cash. Two more containers were en route from China at the time. When they arrived, Customs searched them. They found over a million cigarettes hidden in metal cabinets.

[3] Mr Hu and Zhong Ze Group were charged with various offences, both pleaded guilty and have been sentenced.

[4] You are married to Mr Hu. Throughout this time you lived together. You operated a furniture business together. Your role in that business was as the manager. Through that business you legitimately imported furniture from China and sold it. But you also participated in the scheme to illegally import cigarettes. You helped to unload the metal cabinets containing the cigarettes. You assisted in finding storage space. You disposed of the metal cabinets once they had been emptied. You assisted in passing on information relating to orders, packing and delivery between the supplier, your brother who packed the containers, and your husband. You assisted with payments to the supplier when required. You conducted market research.

Starting point

[5] Your role is not as significant as Mr Hu. I accept that he was the mastermind and he sold the cigarettes. But the evidence showed your active involvement, your willing involvement, your knowing involvement. You jointly shared in the rich rewards. Following trial I found you guilty of:

• (a) twenty-eight charges under s 211 of the Customs and Excise Act 1996, for which the maximum penalty was six months’ imprisonment;
  
  • (b) seven charges under s 371 of the Customs and Excise Act 2018 that carries a maximum penalty of five years’ imprisonment on each charge; and
    
  • (c) four charges under s 372 of the 2018 Act which carries a maximum penalty of six months’ imprisonment.
    

[6] There are obvious features which make this offending serious:

• (a) the planning and premeditation,
  
• (b) the duration and scale of the operation,
  
• (c) the extent of the loss, and
  
• (d) that this was all for your own financial gain.
  

[7] It is important that when I sentence you I look at the sentence handed down on Mr Hu. There has to be some parity, some relationship between the starting point I take for you and the starting point adopted for Mr Hu. Mr Hu received a starting point of eight years’ imprisonment. Both sides have referred to cases of importations and Customs offending of this kind. I need not go through those here, I have been through them. But this is one of the largest cases of its kind that New Zealand has ever seen. No one can argue with the eight-year starting point that Mr Hu received. I accept that you had a lesser role than he did, albeit it was still a reasonably significant role. He was also charged with slightly more, his offending went back to 2015 and included charges of creating false records. Those charges are not much beyond what you were charged with but they still warrant a reduction in the starting point for you. There is a difference between reducing the starting point because of the role that you played and the reasons why you played that role. I will come to those reasons in a moment. For your lesser role and fewer charges, I take a starting point as low as I can. We begin at six years.

Reductions

[8] You have agreed $5.5 million in forfeiture. Forfeiture does not ordinarily reduce a sentence. But it reduces the amount of the loss and that is something factored into the starting point in a case such as this.1 I reduce the starting point for that factor to five and a half years.

[9] You have no previous convictions. You claim that that makes you a person of good character, which ordinarily it would do. However, any discount I give you for that must be modest given that you have shown such a dishonest character through this offending for some years.

[10] I have a s 27 report. It talks of your situation and the wider cultural context for Chinese women. It speaks of the cultural duty of a wife to her husband, something much different from the experience of New Zealand women. It speaks of the pressure that you were under from your husband, it speaks of the effect that that pressure and your offending as well as these proceedings has had on your mental health, although it relies heavily on your own self-report. I have no reason to not accept what is contained in that report about those factors. I accept those factors.

[11] That report speaks also of the effect of all of this on your children. Children always suffer when their parents offend. That is always the highest cost and the greatest betrayal. I am required under our treaty obligations as well as common sense to consider the impact of any sentence upon children. I have a psychologist's report which details the impact that this offending and a possible prison term would have on them. I have no reason to doubt any of that. Your children, however, are no longer children. They have both finished school and are moving on with the next phases of their lives. When you first appeared before me for sentence not long ago they were in a far more precarious position. The youngest was still at school, their father was in prison, both faced a very difficult situation if you were to pay the price that you should pay for your offending. Thankfully for them the situation is perhaps a little easier. Significantly, as I have said, they have both finished school and are now in the adult phase of their lives. Their father has been released on parole and is available to provide

1 Henderson v R [2017] NZCA 605.

whatever support he is able to give. It may well be in keeping with cultural expectations that he has not been the primary person responsible for them over the years. However, being of the ages that they are, they do not need the support that they once did. Perhaps, too, it is time for their father to step up and put his children first.

[12] All these factors do warrant a discount from your sentence, however. All the factors that I have referred to would justify a reduction of two and a half years.

Result

[13] On each of the charges that carry the five-year maximum penalty, I sentence you to three years’ imprisonment. On each of the remaining charges to six months’ imprisonment. Those terms are concurrent.

Judge EM Thomas

District Court Judge | Kaiwhakawā o te Kōti ā-Rohe

Date of authentication | Rā motuhēhēnga: 24/01/2022