WU v COMMISSIONER OF POLICE [2022] NZCA 65

WU v COMMISSIONER OF POLICE [2022] NZCA 65 [18 March 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA398/2019[2022] NZCA 65BETWEEN CHIEN-HUI WUAppellantAND COMMISSIONER OF POLICERespondentHearing: 26 October 2021 (further submissions received on 17 December2021)Court: Brown, Clifford and Goddard JJCounsel: R M Mansfield QC for AppellantM R Harborow and A R Masters for RespondentJudgment: 18 March 2022 at 10.30 amJUDGMENT OF THE COURTA The applications for leave to adduce further evidence are granted.B The appeal is dismissed.C The appellant must pay the respondent costs for a standard appeal on aband A basis with usual disbursements.D The application for costs on the respondent's withdrawn strike outapplication is declined.____________________________________________________________________REASONS OF THE COURT(Given by Clifford J)2Introduction[1] The appellant, Chien-Hui Wu, is married to Ka Kit Yim. In March 2016Mr Yim was arrested on suspicion of involvement in methamphetamine offending.Shortly afterwards the police searched Ms Wu and Mr Yim's family home and other,principally storage, addresses associated with them. As a result the police seizedproperty, comprising cash, motor vehicles, designer jewellery, handbags andother chattels. That and other property was made subject to restraining orders bythe High Court in 2016.[2] On 18 July 2019 in the High Court at Auckland, Jagose J made civil forfeitureorders against Ms Wu and Mr Yim under the Criminal Proceeds (Recovery) Act 2009(the Act).1[3] To eliminate the chance of profiting from criminal activity, the Act providestwo main types of civil orders forfeiting respectively tainted assets and property moregenerally. The first, an assets forfeiture order, must be made by the High Court whereit is satisfied on the balance of probabilities that the assets in question are tainted.2Assets are tainted where they have been acquired or derived wholly or in part fromsignificant criminal activity.3 The owner of those assets need not have beenresponsible for, or even aware of, that activity. The second, a profit forfeiture order,must be made where the High Court is similarly satisfied the owner of the assets inquestion has knowingly benefited from significant criminal activity, even though thoseassets are not themselves tainted.4 The maximum recoverable amount under aprofit forfeiture order is the value of the unlawful benefit less the value of any propertyforfeited to the Crown as the result of an assets forfeiture order made in relation to thesame criminal activity.5[4] The High Court's forfeiture orders against Mr Yim and Ms Wu comprised:1 Commissioner of Police v Yim [2019] NZHC 1681 [Judgment under appeal].2 Criminal Proceeds (Recovery) Act 2009, s 50(1).3 Section 5(1).4 Section 55(1).5 Section 54(1). The value of unlawful benefit is calculated by the Commissioner and stated in theapplication for profit forfeiture order, and is presumed to be correct: ss 52 and 53.3(a) assets forfeiture orders over:(i) a residential property at 74G Ireland Road, Panmure, Auckland(Ireland Road);(ii) 13 vehicles, including a 2015 Ferrari 458 Speciale, registeredto Mr Yim (the Ferrari) and a 2014 Porsche Cayman GTS,registered to Ms Wu (the Porsche);6(iii) approximately $1,883,206 cash, $386,335 in bank accounts and$167,550 in trading accounts with CMC Markets New ZealandLtd (the CMC accounts);7(iv) numerous items of personal property including jewellery,watches, handbags, bottles of wine, cameras, an iPad, bicyclesand vehicle parts; and(b) a profit forfeiture order against Mr Yim and Ms Wu with an unlawfulbenefit value of $5,315,521.32 (with a maximum recoverable amountof $280,259 given the assets forfeiture orders made) for which Mr Yimand Ms Wu were jointly and severally liable.[5] In the High Court Ms Wu argued the following property was hers and wasneither "tainted" nor the fruit of significant criminal activity:(a) Ireland Road;(b) the Porsche and the Ferrari;(c) the $167,550 in her CMC accounts, and $350,000 of the bank fundsheld in her lawyer's trust account (the Kiwibank account);6 For three of those vehicles it was, to be precise, the proceeds of sale that were forfeited, ratherthan the vehicles themselves.7 The funds remaining in bank accounts included (in approximate figures) $350,000 in Ms Wu'slawyer's Kiwibank trust account, $32,000 in ASB bank accounts held by Ms Wu and Mr Yimjointly, and $340 in ANZ bank accounts held by Ms Wu personally.4(d) $1995.80 cash, and $18,600 in foreign currency found at Ireland Road;and(e) 42 of the 115 personal items.[6] Ms Wu said that property — not being tainted — should not have beenthe subject of assets forfeiture orders and, in addition, as she had no knowledge of anyunlawful benefits she may have received, she should not be liable for theprofit forfeiture order. Mr Yim, who had earlier been convicted of possession ofmethamphetamine for supply and sentenced to 11 years and six months' imprisonment,supported Ms Wu's opposition to those assets and profit forfeiture orders inthe High Court. Neither of them, however, resisted the forfeiture of the other propertysubject to the assets forfeiture orders; namely, the 11 vehicles, the $1.8 million cash,the funds remaining in certain joint bank accounts, and the other 73 personal items.[7] Ms Wu now appeals the High Court orders to the extent they were madenotwithstanding her opposition. Mr Yim does not appeal.Background[8] Supported by her parents in Taiwan, Ms Wu came to New Zealand in 1994,aged 15, to study. She was granted New Zealand citizenship on 8 September 2003 andcompleted a Bachelor of Arts degree from Auckland University of Technologyin 2004.[9] In July 2002 she purchased her first home in New Zealand,404C Ellerslie-Panmure Highway. She sold that property in July 2003 to fund thepurchase of her second home, 37 Spalding Rise, in February 2004. In July 2005Ms Wu committed to purchase Ireland Road, the property the subject of the assetsforfeiture orders, for $630,000. That acquisition was settled on 4 November 2005. Asexplained later, a revolving credit facility was secured against Ireland Road in 2007.[10] Ms Wu met Mr Yim in early 2003. They married in October 2005. They livedtogether at Ireland Road from the time Ms Wu acquired that property in5November 2005 until Mr Yim was arrested in 2016, except for a period of aboutone-and-a-half years between 2010 and 2011 during which the couple had separated.Mr Yim's arrest[11] In late February 2016 New Zealand Customs intercepted some 39 kilogramsof methamphetamine concealed in granite tea trays at the Auckland port. The majorityof the drug was replaced with a placebo substance.[12] A controlled delivery of that consignment was effected on 1 March 2016.Later that day police observed Mr Yim meeting with the persons to whom thatconsignment had been delivered and receiving a large bag from them. Mr Yim wasobserved returning that bag later that same evening.[13] The next day, Mr Yim was found to be in possession of a snap lock bagcontaining the placebo substance and $2,478 in cash. The police found a further$24,895 in cash in his vehicle, together with a sum of foreign currency. The policealso executed a search warrant at Ireland Road. There they found a total of $210,445from various areas around the house in $20, $50, and $100 denominations. They alsofound four cellphones and numerous SIM cards for New Zealand, Chinese andHong Kong networks.[14] On 3 March 2016, police executed a second search of Ireland Road. Inside thehouse, they found:(a) a total of $1,995.80 in cash;(b) cash in foreign currency including Hong Kong dollars, Japanese Yen,Chinese Yuan, and Taiwanese dollars to the value of approximatelyNZD $18,600; and(c) a number of wrist watches and items of jewellery, a collection of finewine, and over 40 handbags and wallets.6[15] Inside the garage at Ireland Road the police found, amongst other things,the Porsche and the Ferrari. Further searches of Mr Yim's vehicles and storage unitwere executed on the 3rd and 6th of March 2016. As a result of those searches, over$1.86 million cash was located, together with a kilogram of methamphetamine, andother indicators of drug dealing (such as snap lock bags, electronic scales, cellphonesand multiple SIM cards).[16] Shortly thereafter Mr Yim was charged with conspiracy to possessmethamphetamine for supply (in relation to his meetings with the recipients of theconsignment on 1 March 2016), and possession of methamphetamine for supply (inrelation to the one kilogram found in his BMW car during one of the search warrants).After the Crown withdrew the conspiracy charge, Mr Yim pleaded guilty to thepossession charge. He was later sentenced by Venning J to 11 years and six months'imprisonment.8The Commissioner's investigation[17] As it happens, in the months leading up to Mr Yim's arrest police hadcommenced an investigation into his and Ms Wu's financial affairs. Inland Revenuerecords showed Mr Yim's only declared income in New Zealand since his arrival in1991 had been state-funded benefits totalling $22,127.82 (gross) during the years 1995to 2000. Ms Wu had only received declared income of $13,475.32 (gross) since shearrived in New Zealand in 1994, which had been derived mainly from bank interest.[18] Pursuant to production orders, police received bank statements for Mr Yim'sand Ms Wu's accounts at ASB Bank. The couple had two joint accounts (the jointASB-52 and 55 accounts),9 as well as a revolving credit facility held in Ms Wu's nameand secured against the Ireland Road property. Ms Wu also had an ASB credit card.[19] After the offending:8 R v Yim [2017] NZHC 702. This Court dismissed an appeal against that sentence: Yim v R [2017]NZCA 421.9 As referred to above at [4(a)(iii)], n 7.7(a) Police discovered that Ms Wu also held two accounts at the ANZ Bank(the ANZ-00 and 46 accounts), and that some $360,000 belonging toMs Wu was held in the Kiwibank account.(b) A Ms Tanya Thompson compiled, on the basis of the informationobtained from that investigation, the Commissioner's financial analysiscovering the seven-year period from 18 March 2009 to 17 March 2016.[20] Ms Thompson calculated that during that period, Mr Yim and Ms Wu had"unknown sources of funds" in the order of $4.7 million. That figure included"unknown deposits" totalling approximately $1.4 million into Mr Yim and Ms Wu'sbank accounts.10 "Unknown deposits", Ms Thompson said, meant "deposits wherefurther information is required to explain the source and nature of the deposit".That figure comprised:(a) 9 deposits totalling $1,080,000 from money remittance companiesbetween July 2014 and December 2015, of which $1 million went intoMs Wu's ANZ-00 and 46 accounts, and the remaining $80,000 wentinto the joint ASB-52 account;(b) 10 unidentified deposits totalling $237,154.51 between May 2011 andOctober 2015, which went into both the joint ASB-52 and 55 accounts,and Ms Wu's ASB Visa account;(c) 32 unexplained cash deposits totalling $80,272.51 between April 2009and December 2015, which went into both the joint ASB-52 and55 accounts, and both Ms Wu's ANZ-00 and 46 accounts;(d) a single international transfer of $16,842.49 into Ms Wu's ANZ-46account on 19 September 2012; and10 It also included some $3.4 million of unexplained purchases from outside the bank accounts, lessunexplained withdrawals from the bank accounts (approximately $62,000), and less fundsavailable to Mr Yim and Ms Wu from known sources, but not deposited into the bank accounts(approximately $340,000).8(e) 8 deposits from unknown individuals totalling $14,377 between March2009 and April 2015 into the joint ASB-52 and 55 accounts.[21] The analysis showed that foreign currency trading accounts used by Mr Yimand Ms Wu had also received unknown deposits. In particular, Ms Wu's CMCaccounts had received three unknown deposits totalling $49,000. Those accountsmade profits in the region of $200,000 in each of the 2011, 2012 and 2016 tax years,and also exceeded $120,000 in the 2015 tax year. Mr Yim's Rencap trading accounts,which were active between 2010 and 2012, had also received some $437,617.49 fromunknown sources. For profits made on those accounts for which tax had not been paid,Ms Thompson calculated an estimated tax liability of $94,831.14.[22] On the basis of those investigations, in March 2018, the Commissioner appliedfor assets and profit forfeiture orders in the High Court.11 Despite their minimaldeclared income, Mr Yim and Ms Wu had acquired a significant asset base. That assetbase, the Commissioner said, was tainted, having been acquired by them as a result oftheir significant criminal activity — not just for the seven years as shown bythe financial investigation — but as far back as early 2003. That significant criminalactivity was threefold. It included Mr Yim's drug offending on a commercial scale,12Ms Wu's laundering of the proceeds of that offending,13 and large-scale tax evasionby both of them in respect of the proceeds of the drug offending and from tradingforeign currency.14Ms Wu's account of events[23] In the High Court, Ms Wu explained that her parents, who live in Taiwan, were"[her] main source of money". She said she had earned money through various"legitimate business interests" by purchasing luxury goods in Hong Kong to sell at amark-up in New Zealand and vice versa, as well as by trading in foreign currency.She also explained that in 2014 she worked as an agent for Nu Skin, a cosmeticscompany. In addition to the money she had earned, Ms Wu said she also received11 Criminal Proceeds (Recovery) Act, ss 43, 50 and 55.12 Misuse of Drugs Act 1975, ss 6 and 7.13 Crimes Act 1961, s 243.14 Tax Administration Act 1994, ss 143 and 143B.9loans and transfers from friends. In particular, Ms Wu said she had been providedwith funds by a friend, a Ms Lilian Liu, who lives in Hong Kong. Ms Wu claimedMs Liu had provided a total of $1 million via money remittance companies intoMs Wu's ANZ-00 and 46 accounts (as referred to above at [20](a)]).15[24] Ms Wu provided the following explanations as regards the specific propertyshe opposed forfeiture of:(a) Ireland Road, which she acquired in November 2005 for $630,000, waspaid for by a deposit of $329,950, and the balance was largely paid fromthe proceeds of sale of the Spalding Drive property. The deposit,Ms Wu said, was transferred by her parents in Taiwan through aNew Zealand-based money remitter called Know-All Group Ltd.16She claimed it was common to use a money remitter because ofgovernment limits on transferring money outside of China.(b) The Porsche and the Ferrari, which had been purchased in September2014 for $178,000 and in July 2015 for $510,655 respectively, werepaid for by monies remitted from Ms Liu.17 Ms Wu said she hadacquired the Porsche by borrowing funds provided by Ms Liu because,at that time, she had suffered "a string of losses" in foreign currencytrading but was committed to buy the car. The Ferrari, she said, wasacquired as an investment with Ms Liu. Ms Wu produced handwrittenagreements signed in October 2014 and June 2015 said to confirmthose arrangements.(c) The balance of $167,550.61 in her CMC accounts was lawfully earnedthrough her foreign currency trading.15 That $1 million was the total of $200,000 provided for the purchase of the Porsche, $400,000provided for the purchase of the Ferrari, and a further $400,000 for potential property investments.16 The money received from this remittance company was not included in Ms Thompson's$1,080,000 figure, because it predated the analysis period.17 Only $330,000 of the $400,000 remitted was applied to the purchase of the Ferrari. The remainderof the Ferrari's purchase was paid for in two cheques, as discussed at [55] below.10(d) The $1,995.80 cash was the proceeds from her sales as an agent for NuSkin products in 2014;18 and the $18,600 in foreign currency was thebalance leftover from various trips to Hong Kong, Japan and Taiwan.19(e) The approximately $350,000 remaining in the Kiwibank account20was funded in part by her friend, Ms Liu, and from her foreigncurrency trading. Ms Wu said $300,000 of that figure was part of themoney provided by Ms Liu in late 2015 for property investments inNew Zealand.21 Those investments had not gone ahead and Ms Liu hadagreed after Mr Yim's arrest that this money could be used for legalrepresentation. Ms Wu produced another handwritten agreementsigned in January 2016 to support the existence of those arrangements.The remainder of the transfer to the Kiwibank account was sourced inpart by some $50,000 transferred to her ANZ-46 account from herCMC accounts.(f) As regards 42 of the 115 personal items, Ms Wu claimed she was thesole and lawful owner as they had either been purchased by her withher own money or been gifted to her from friends and family. She saidshe had a personal connection to each of them.[25] Ms Wu claimed she had no knowledge of Mr Yim's criminal activity. Nor hadshe benefited from those activities. Accordingly profit forfeiture orders should notbe made. However, if orders were to be made, she sought relief in the High Courtunder ss 51 and 56 of the Act on the grounds of undue hardship.18 Although, Ms Wu later said at the High Court hearing this money was the balance from anoverseas trip.19 Ms Wu does not claim the Chinese currency included in that balance. She accepts that currencybelonged to Mr Yim.20 A total of $360,000 was transferred to the Kiwibank account from Ms Wu's ANZ-46 account inMarch 2016.21 The other $100,000 of the $400,000 remitted by Ms Liu for property investments (see above at[23], n 15) was transferred to Ms Wu's CMC accounts.11High Court judgment[26] Jagose J was satisfied the Commissioner had demonstrated Mr Yim andMs Wu's involvement in significant criminal activity, which was "more likely than notconstituted by drug offending, and associated money laundering and tax evasion"since the early 2000s.22 They had amassed significant assets despite having nodeclared sources of income other than bank interest, against the backdrop ofdrug offending.23 Their money had been dealt with in unorthodox ways, likelyexplicable as being for its concealment, and despite Ms Wu's success in foreigncurrency trading, there was an absence of material tax returns. While the knowledgerequirements of the money laundering and tax evasion offences were matters for trial,the Judge was satisfied there was sufficient evidence to "support the allegations".24[27] In reaching those conclusions, the Judge made adverse credibility findingsagainst Ms Wu. Her affidavit opposing the forfeiture orders was, he said, a "work ofadvocacy" prepared by another person, unable to be explained by her orally.25No records were kept and no evidence had been tendered from her family, friends orclients to support her contention she had received money or loans from them.26In particular, the Judge did not accept Ms Wu's account concerning Ms Liu'sinvolvement in remitting the $1 million, finding the handwritten acknowledgementssaid to confirm their arrangements were manufactured after the fact.27 He also foundreason to question Ms Liu's identity.28[28] The Judge went on to reject Ms Wu's evidence as regards all of the propertyin dispute.29 Rather, the Judge found that the property was tainted by significantcriminal activity. In particular, the deposit on the purchase of Ireland Road in 2005was likely to have been derived from significant criminal activity. In any event, theJudge said, Ireland Road had been tainted by the revolving credit facility securedagainst it, as the drawdowns exceeding $900,000 had been met by transfers from the22 Judgment under appeal, above n 1, at [25].23 At [16] and [18].24 At [18]–[19].25 At [21].26 At [22]–[23].27 Referred to above at [24](b)].28 At [24].29 At [30], [33], [36], [37], [39] and [44].12joint ASB-52 and 55 accounts, and some $90,000 cash, despite no legitimate sourcesof income.30[29] Having rejected Ms Wu's account as regards the purchases of the Porsche andthe Ferrari, and in respect of the $1,995.80 cash and the $18,600 in foreign currencyfound at Ireland Road, the Judge was satisfied those vehicles and that moneywere tainted.31[30] The funds in the CMC accounts were tainted by the $49,000 which had beendeposited from unknown sources. Given those funds were likely derived from drugoffending, their use in currency trading supported the allegation of money laundering,and the failure to report Ms Wu's profits supported the allegation of tax offending.32The $350,000 in the Kiwibank account was also tainted by the CMC accounts, becausesome $50,000 had been used to fund the transfer to the Kiwibank account.33[31] As regards the personal items, they were acquired during the course of Mr Yimand Ms Wu's relationship, the whole of which had been "contemporaneous with, andfinancially indistinct from" the significant criminal activity.34 That rendered all theirrelationship property tainted. Moreover, the Judge did not accept the personal itemswere gifts and they were accordingly tainted, with the possible exception of a watchMs Wu claimed to have been given by her father.35[32] Finally, the Judge considered Ms Wu had either known, or been wilfully blindto the fact, that she had received unlawful benefits from significant criminal activity,and as she was not reasonably likely to suffer undue hardship in granting theCommissioner's applications,36 the Judge made assets forfeiture orders, and a profitforfeiture order for $280,259, the maximum recoverable amount.30 At [30].31 At [33]–[36].32 At [37].33 At [38].34 At [42].35 At [43]–[44].36 At [46] and [54]; and Criminal Proceeds (Recovery) Act, ss 51 and 56.13This appeal[33] In this Court, Ms Wu argues that the evidence could not sustain the assetsforfeiture orders over Ireland Road, the Porsche and the Ferrari, the CMC accounts,the $1995.80 cash and $18,600 in foreign currency, and the personal items. Ms Wusays she had advanced credible explanations as to the source of the monies applied tothat property, and the Commissioner had not met the burden of proving that propertywas tainted on the balance of probabilities. The Judge's factual findings as to theextent of the significant criminal activity "since the early 2000s" were wrong, and his"wholesale disregard" of her evidence was unwarranted. As the Judge had erred asregards the assets forfeiture orders, it followed that the calculations of the profitforfeiture orders were also wrong. In addition, Ms Wu says she did not know, nor wasshe wilfully blind to the fact, that she had unlawfully benefited from significantcriminal activity. She should not therefore have been jointly liable for the profitforfeiture order.[34] Ms Wu made two applications for further evidence to be adduced in support ofher appeal:37(a) An affidavit of Dr Mhairi Duff, a consultant psychiatrist, whichattaches a report as to Ms Wu's physical and mental health. Dr Duffnotes that Ms Wu's family upbringing was such that people had moneywhen it was needed without having to work in a traditional sense.The provision of money for her needs was managed by her parents andthen, following her marriage, by Mr Yim. There was, accordingly, inDr Duff's view, a "strong sense of pampered naivety" in Ms Wu's lifeexperiences. In the absence of opposition from the Commissioner,we admit that evidence.(b) An affidavit of Mr Robin McCusker, a consultant specialising intransnational crime in the United Kingdom. He explains the use ofmoney remittance schemes is common amongst the Chinese andTaiwanese populations. The Commissioner opposes the admission of37 Court of Appeal (Civil) Rules 2005, r 45.14this evidence, not only because it has been filed a year out of timewithout any explanation, but because the purpose of money remittanceschemes was before the High Court and so Mr McCusker's evidence isnot fresh.38 At the hearing of the appeal, we indicated we would dealwith this application de bene esse because a Registry error meant weonly saw Mr McCusker's evidence shortly before the hearing. Asmatters have transpired, the evidence has provided helpful backgroundand we admit it accordingly.[35] In terms of the appeal, the Commissioner says Ms Wu's credibility was for theJudge to determine and this Court should not lightly depart from his findings.The Judge, being entitled to draw together the strands of circumstantial evidence, wasright to find there was evidence of significant criminal activity since the early 2000s.Finally, the Commissioner supports the Judge's findings as regards the tainted propertyand Ms Wu's wilful blindness to justify the making of the assets and profitforfeiture orders.AnalysisThe law[36] The basic aim of the Act's regime for the forfeiture of property is, as this Courtdescribed it in colloquial terms, to "make sure that crime does not pay".39 The Actitself provides the regime was enacted to, as relevant:40(a) eliminate the chance for persons to profit from undertaking or beingassociated with significant criminal activity; and(b) deter significant criminal activity; and(c) reduce the ability of criminals and persons associated with crime orsignificant criminal activity to continue or expand criminal enterprise38 Rae v International Insurance Brokers (Nelson Marlborough) Ltd [1998] 3 NZLR 190 (CA) at192–193.39 Commissioner of Police v Harrison [2021] NZCA 540 at [7].40 Criminal Proceeds (Recovery) Act, s 3(2).15[37] Sections 50 and 55 of the Act confer jurisdiction on the High Court to makeassets and profit forfeiture orders. Those sections provide, as relevant:50 Making assets forfeiture order(1) If, on an application for an assets forfeiture order, the High Court issatisfied on the balance of probabilities that specific property istainted property, the Court must make an assets forfeiture order inrespect of that specific property.55 Making profit forfeiture order(1) The High Court must make a profit forfeiture order if it is satisfied onthe balance of probabilities that—(a) the respondent has unlawfully benefited from significantcriminal activity within the relevant period of criminalactivity; and(b) the respondent has interests in property.[38] It is not necessary for the respondent to have personally engaged in thesignificant criminal activity. It is enough that the property was derived, wholly or inpart, by such activity.41 Significant criminal activity must be proved to the civilstandard: that is, on the balance of probabilities. Section 6 of the Act defines"significant criminal activity" as:6 Meaning of significant criminal activity(1) In this Act, unless the context otherwise requires, significantcriminal activity means an activity engaged in by a person that ifproceeded against as a criminal offence would amount to offending—(a) that consists of, or includes, 1 or more offences punishable bya maximum term of imprisonment of 5 years or more; or(b) from which property, proceeds, or benefits of a value of$30,000 or more have, directly or indirectly, been acquired orderived.(2) A person is undertaking an activity of the kind described in subsection(1) whether or not—(a) the person has been charged with or convicted of an offencein connection with the activity; or41 Doorman v Commissioner of New Zealand Police [2013] NZCA 476, [2014] 2 NZLR 173 at [23].16(b) the person has been acquitted of an offence in connection withthe activity; or(c) the person's conviction for an offence in connection with theactivity has been quashed or set aside.[39] In this case, the Commissioner says the significant criminal activity involvesdrug offending, money laundering and tax evasion.[40] Mr Mansfield QC first took issue with what he perceived to be the Judge'sframing of the degree to which significant criminal activity had to be proved.The Judge said:42[18] Certainly the presence of unexplained funds alone is insufficient.But both Mr Yim and Ms Wu had very substantial amounts of money in theircontrol – without plausible explanations as to its source, against a backdrop ofdrug offending – and dealt with it in unorthodox ways likely explicable asbeing for its concealment in terms of s 243 of the Crimes Act 1961. That isenough to support an allegation of money-laundering, sufficient to enabletheir conduct to be prosecuted as such, whether or not in fact pursued.The question is if there is activity that, "if proceeded against as a criminaloffence", would amount to the qualifying offending. The quality of Ms Wu'sknowledge falls to be determined at a trial. It cannot be said she could nothave a requisite quality of knowledge.[19] The same response may be made to Ms Wu's resistance to theCommissioner's allegations of tax evasion. The availability to Mr Yim andMs Wu of $4.66 million in funds over the seven-year period prior tothe restraining orders, Ms Wu being engaged in foreign exchange investmentand trading with some success, and the absence of any material tax returns isagain sufficient to support the allegations, Ms Wu's requisite knowledgefalling to be determined at a trial.[41] Mr Mansfield submitted the Judge erred in his legal assessment of the standardof proof for significant criminal activity by effectively holding that the Commissionerneed only allege that activity, not prove it. We do not agree. In our view, the Judgeused that phrasing to reflect the scheme of the Act. As s 6(2) provides, a person mayhave undertaken significant criminal activity irrespective of whether they have beencharged with or convicted for that activity.43 That is, the Commissioner can apply forcivil forfeiture orders without criminality having been established beyond42 Judgment under appeal, above n 1 (footnotes omitted and emphasis added).43 See further Criminal Proceeds (Recovery) Act, ss 15–16.17reasonable doubt. To that extent, when the Commissioner applies for such an order,he or she is alleging such unlawful activity which must then be established in terms ofthe requirements of the Act.[42] For an assets forfeiture order to issue, the property proposed to be forfeitedmust have been "tainted" by the significant criminal activity made out. Section 5(1)of the Act defines "tainted property" as:tainted property—(a) means any property that has, wholly or in part, been—(i) acquired as a result of significant criminal activity; or(ii) directly or indirectly derived from significant criminalactivity; and(b) includes any property that has been acquired as a result of, or directlyor indirectly derived from, more than 1 activity if at least 1 of thoseactivities is a significant criminal activity.[43] While the "tainted property" requirement is central to an assets forfeiture order,there is no such requirement for the making of a profit forfeiture order. Rather, profitforfeiture orders target respondents who have "unlawfully benefited from significantcriminal activity". That phrase is defined in s 7 of the Act:7 Meaning of unlawfully benefited from significant criminalactivityIn this Act, unless the context otherwise requires, a person hasunlawfully benefited from significant criminal activity if theperson has knowingly, directly or indirectly, derived a benefit fromsignificant criminal activity (whether or not that person undertook orwas involved in the significant criminal activity).[44] As can be seen, knowledge of having derived a benefit from significantcriminal activity is a requirement for the making of a profit forfeiture order, but notfor the making of an assets forfeiture order. Moreover, wilful blindness is sufficientto meet that knowledge element; that is, where a person's suspicions have beenaroused (for example, by being made aware that a particular state of affairs may exist)18but that person deliberately refrained from making enquiry in order to avoid learningwhether their suspicion was justified.44Identifying the significant criminal activity and tainted property[45] We think it is significant that, in the High Court, Ms Wu did not challengethe forfeiture of the funds in the joint ASB-52 and 55 accounts (some $32,000).Moreover, while she did challenge the forfeiture of the funds in her ANZ-00 and46 accounts (some $340), in the High Court those funds were forfeited. She has notchallenged that order on appeal. While we do not put as much weight on the fact thatforfeiture of the funds in her ANZ-00 and 46 accounts was not challenged, it isapparent from the financial analysis that there has been significant co-mingling offunds between the joint ASB-52 and 55 accounts and the CMC accounts and Mr Yim'sRencap accounts, and between Ms Wu's ANZ-46 accounts and her CMC accounts.To the extent the assets, the forfeiture of which is challenged, were paid for orrepresent wholly or in part the application of funds from Ms Wu and Mr Yim's bankaccounts, directly or indirectly, those assets are also tainted.[46] As we have explained, Mr Yim and Ms Wu's bank accounts and currencytrading accounts received significant amounts of unknown deposits. The merepresence of "unknown deposits" does not necessarily mean such deposits have beenderived from significant criminal activity. As the High Court said in Commissioner ofPolice v Zhu:45Establishing that deposits into a bank account are unidentified is only the startof the exercise. The applicant does have the benefit of the civil standard ofproof and the statutory presumptions as to the quantum of any allegedunlawful benefit. But the applicant also has the onus of establishing factswhich enable the inference to be drawn, as a logical and reasonable conclusionfrom facts proven to the civil standard, that the deposits are the fruits ofcriminal activity.[47] However, in our view the Commissioner has established facts enabling us toinfer the deposits are the fruits of significant criminal activity. We, like the Judge, aresatisfied that includes the drug offending to which Mr Yim pleaded guilty; the tax44 Vincent v Commissioner of Police [2013] NZCA 412 at [52].45 Commissioner of Police v Zhu [2015] NZHC 2175 at [66].19evasion, based on significant profits made through the foreign currency trading whichwere not declared and accordingly not taxed; and the money laundering, judging bythe significant amount of money from unknown sources that has been deposited intoMs Wu's CMC accounts and into the money remittance companies.[48] IE Money, the money remittance company which deposited the $1 million saidto have come from Ms Liu, confirmed the remittances made came from two Chinesebank accounts. However, IE Money said it could not provide any evidence of who"physically made the deposit to [those] bank accounts" because the bank accounts hadbeen given to them by a Mr Wong, the counterparty responsible for providing andmaintaining the Chinese accounts, with whom they had stopped doing businessin September 2016.[49] Mr McCusker's evidence is that money remittance schemes are commonlyused in jurisdictions with Chinese populations including Taiwan. He says there isnothing inherently unlawful about such schemes and that, because they are highlytrusted, it is common for them not to be supported by documentary records.[50] However, we need only quote from the Commissioner's submissions which, inour view, properly capture the implausibility of Ms Wu's account as regards Ms Liu:Ms Wu alleged a total of $1 million was transferred to her by her friend,'Lilian' (Ms Liu), in 2014 and 2015. In the information provided by Ms Wuthere were fundamental mistakes in the spelling of Ms Liu's name, appearingto be an amalgamation of Chinese and Hong Kong language spellings(including in Ms Liu's personal email address). Somewhat amazingly, Ms Wuinvited the Court to believe that Ms Liu misspelt her own name. When theCommissioner contacted Ms Liu to verify her identity, she refused toprovide verification. Ms Wu provided the Commissioner with notes whichpurported to record the loan of funds but Ms Wu accepted these had been handwritten by her after the funds had been received. She said the original noteswere stored in a drawer at 74G Ireland Road but the Police must haveoverlooked them when searching the property. Under cross-examination,Ms Wu contended the Police dismissed the notes as "love letters", despite asenior searching officer being a native mandarin speaker. Ms Liu failedto take any steps in either the High Court or appellate proceedings. Ms Wualleges this is because Ms Liu violated the limits on the transfer of funds outof China and Hong Kong – but there are in fact no limits on the amount offunds that can be transferred out of Hong Kong. (Footnotes omitted.)20[51] Furthermore, we do not agree with Mr Mansfield's submission that the Judgewas not entitled to make the credibility findings he made. This Court is normallyreluctant to intervene in or revisit factual findings where the trial Judge has had thebenefit of seeing and hearing the witnesses.46 The Judge noted, in particular:47Her affidavits were presented directly in English language; her oral evidencein Chinese language, through translators. It is plain at least her secondaffidavit was a work of advocacy prepared by another, the most graphicexample being the affidavit's use of automotive technology terms derivedfrom English-language publicity material provided by Ms Wu to her lawyers,not able orally to be explained by Ms Wu. The best Ms Wu could say ofthe affidavit was she understood "most of it". That falls a long way short ofthe requirement in s 83(3) of the Evidence Act 2006 the affidavit be Ms Wu's"personal statement", and risked its exclusion.[52] To explain, Ms Wu said in her affidavit opposing the making of civil forfeitureorders that the Ferrari was:9.4 a collectable car because it has the original V8 Ferrari naturallyaspirated engine. This makes it special because it is the last naturallyaspirated car that Ferrari will manufacture.[53] At the High Court hearing, Ms Wu gave the following evidence:Q. Did you use the words "naturally aspirated" in your affidavit"? A. When I was working with my lawyer to prepare this affidavit, myexplanation was this is the vehicle, this model of vehicle is no longerin production, so you would never be able to buy the same model ofvehicle anymore.Q. You never used the words yourself "naturally aspirated" is that yourevidence?A. I wonder if I can get to know the meaning or the interpretation,translation of the word "aspirated" then I might be able to explainwhat it was.Q. Did you not write paragraph 9.4 of your affidavit?A. This is my affidavit but I was providing the information using mybasic and simple English to explain that this vehicle is of significantvalue because it's the end of line model and you will not be able tobuy it in the future anymore.46 Commissioner of Police v Dryland [2013] NZCA 247 at [24].47 Judgment under appeal, above n 1, at [21] (footnote omitted).21Q. My question was, did you write paragraph 9.4 of your affidavit?A. Looking at it, like it is now, it's – I did, I wrote it.Q. Do you know what "naturally aspirated" means?A. I'm not really familiar with this word and it's difficult to explain mymeaning in Chinese in to English.[54] As that exchange demonstrates, the evidence in Ms Wu's affidavit is notentirely her own account and her responses to questioning were unhelpful. Moreover,it appears one of Ms Wu's claims before the High Court has since turned out tobe false. Ms Wu claimed a particular watch subject to forfeiture had been gifted to herfrom her father in 2002. The Judge accepted the possibility that watch may not havebeen tainted property.48 However, the Commissioner has since confirmed followingenquiries with the watchmaker that Ms Wu's explanation cannot be right, since thewatch's model was not marketed until 2004 and, in particular, the version owned byMs Wu was not marketed until 2007.[55] The use of tainted funds flowed through to the purchases of the Porsche andthe Ferrari, because both purchases were funded through monies provided bythe remittance companies. In our view an additional basis for the tainted status of theFerrari is that, while $330,000 was paid using remittance funds, two other cheques of$30,000 and $150,000 were paid which originated from unknown sources.49 In theHigh Court hearing, Ms Wu said both cheques were received from unknown males inMarch and July 2015 respectively. When questioned about those events, Ms Wu saidboth cheques were arranged by her friend Ms Liu, but she did not know the males'names and nor did she ask for them. Ms Wu was cross-examined on those events:Q. So we've talked about these two men you collected cheques from andif we scroll through to page 33 [of Ms Wu's second examinationinterview transcript], you've said now in fact, "One was a male theother was from female." So do you mean the other one was a female?A. I was actually confused during the interview, I was searching throughmy memory in order to answer the questions. What I recall from myrecollection is that a female friend of hers took the cheque out of herhandbag, however it was a male that handed the cheque to me.48 At [43].22During the interview Detective Sun was constantly testing me about thecheques amounted $150,000. I believe I have mixed up the amount,mixed up the cheques with the different amounts. But I recall the twodiscrete locations.[56] We, again, consider Ms Wu's account lacks credibility. We acknowledgeDr Duff's evidence about Ms Wu's mental and physical health but, in view of the clearinconsistencies and implausibility of her evidence, we are not persuaded to departfrom the Judge's credibility findings.[57] Turning to the personal items, Ms Wu explained that some of them were hers,either because she had purchased them herself, or because they were received as giftsfrom friends or family. Those she sought the return of had sentimental value to her.However, we agree with the Judge that we cannot accept Ms Wu's "bare contentionsof gifts from third persons" because of our view of her credibility, particularly whenthe truth about the watch has come to light.50 Moreover, Ms Thompson's analysisshowed the total estimated value of all the jewellery restrained in this proceeding wasapproximately $260,000, and payments of approximately $34,000 were made fromMr Yim and Ms Wu's bank accounts. We consider it is probable these items werepurchased with funds likely to have derived from significant criminal activity.[58] As regards the cash Ms Wu opposes the forfeiture of, in her affidavit of20 July 2018, Ms Wu claimed the NZD $1,995.80 was the proceeds of sales ofNu Skin products. There was no documentary evidence to support that claim.Notwithstanding that, at the High Court hearing Ms Wu's account became confused,as Ms Wu claimed that cash was money remaining from a trip in 2016 to Taiwan,Japan and Hong Kong.51 As regards the $18,600 in foreign currency claimed to havebeen from her other overseas trips, Ms Wu claims the Singaporean Dollars were givento her by Mr Yim's grandmother "many years ago", and refers to one particular holidayto Taiwan when her parents had provided her with approximately NZD $20,000 inspending money. In our view, both explanations lack credibility and, viewed in thecontext of the substantial amount of cash found at Ireland Road and cash Mr Yim and50 At [43].51 At [35].23Ms Wu had available to them more generally, we are satisfied the $1,995.80 and$18,600 cash constitutes tainted property.How far back does the significant criminal activity go?[59] In support of his view that Mr Yim and Ms Wu's significant criminal activityextended back to the "early 2000s", the Judge noted their links to China andHong Kong and that neither had declared material sources of income since theirarrivals in New Zealand in the 1990s. Ms Wu says there was insufficient evidence ofsignificant criminal activity extending back to the early 2000s, and that it was only soalleged for the Commissioner to seek forfeiture of Ireland Road.[60] Ms Wu agreed to purchase Ireland Road in July 2005 for $630,000. As noted,Ireland Road was the third New Zealand property to be owned by Ms Wu.[61] The Commissioner focuses on the lack of evidence supporting Ms Wu'saccount about the initial acquisition of Ireland Road, and raises questions about thepurchase of Ms Wu's second property, Spalding Rise, for $269,000. After payment ofthe deposit on Spalding Rise, the balance of $243,241.60 was paid with an ASB bankcheque issued from the joint ASB-52 account which appears to have been funded inpart through significant cash deposits.[62] Ireland Road was then purchased using the proceeds of sale of Spalding Riseof $308,000. While the agreement for sale and purchase for Ireland Road onlyrequired a $100,000 deposit, over the course of two days in August 2005 some$329,950 was paid in two separate transactions on Ms Wu's behalf byMr San Wan Sze. Ms Wu said that money was remitted from her parents, having beentransferred by her uncle's wife's family in repayment of her father's investment in heruncle's business in China. However, Know-All Group Ltd, the company of whichMr Sze was a part, was involved in the laundering of proceeds of drug offendingbetween 1998 and 2008.5252 Commissioner of Police v Know-All Group Ltd HC Auckland CIV-2010-404-403,7 November 2011.24[63] We accept the circumstances surrounding these transactions are questionable.However, it is for the Commissioner to prove the existence of significant criminalactivity on the balance of probabilities from the early 2000s as alleged. We are notsatisfied to that degree that significant criminal activity existed at that time.Accordingly we cannot say the funds for the initial acquisition were tainted funds.[64] Notwithstanding that, we are prepared to accept on the basis of Ms Thompson'sfinancial analysis that there was significant criminal activity from the beginning of heranalysis period in March 2009. The clear impression from those accounts is thatsignificant criminal activity was in existence at that time. It was also around that timethat Ms Wu opened her CMC accounts (February 2008), that Mr Yim startedpurchasing the vehicles which have been forfeited (June 2010), and that Mr Yimopened his Rencap account (September 2010). We are satisfied there is sufficientevidence of significant criminal activity around that time on the balanceof probabilities.Is Ireland Road tainted by the repayments to the loan?[65] At the hearing, we sought further submissions from the parties on the subjectof whether the use of a secured revolving credit facility could taint property (where thefacility was not used for the initial acquisition of the property).[66] In July 2007, Ireland Road was used to secure a revolving credit facility infavour of Ms Wu for $300,000. Between July 2007 and December 2015, a total of$903,803.57 was drawn down and $842,329.73 was repaid. Those repayments wereprimarily funded by transfers from Mr Yim and Ms Wu's joint ASB-52 and55 accounts.[67] Mr Mansfield submits that the definition of "tainted property" is clear: therelevant significant criminal activity must precede the acquisition or derivation of theproperty; that is, property "acquired" or "derived" before that activity occurs cannotbe tainted by that subsequent activity. Accordingly, since Ireland Road was acquiredbefore the credit facility was taken out, and before any significant criminal activitytook place, it cannot be tainted.25[68] The Commissioner says the fact Ireland Road was purchased outright prior tothe facility being secured does not preclude that property subsequently becomingtainted. Rather, the repayments of the revolving facility using the proceeds of crimetaint Ireland Road. Referring to the broad definitions of "property" and "interest" inthe Act,53 the Commissioner says that Ms Wu has increased her interest in the propertyby using those proceeds, whilst decreasing the mortgagee's interest.[69] The Commissioner refers to this Court's decision in Duncan v Commissionerof Police.54 In that case, the land was lawfully acquired using legitimate funds and amortgage was subsequently registered against the property to secure borrowed fundsused to build a house. The High Court found the mortgage payments could not havebeen made but for the significant criminal activity, and accordingly the property wastainted. This Court, in upholding assets forfeiture orders made against the land, held:[18] We have already set out the definition of "tainted property". We notehere that para (a) of that definition refers to property that has "wholly or inpart" been acquired or derived as set out in the paragraph. Andrews J foundthat, since 2005, funds for the mortgage payments were derived from"significant criminal activity", a finding that is not now challenged. The resultof the mortgage reductions increased Mr Duncan's equity in the property byreducing the principal sum owed. His interest as the registered proprietor wasthereby increased. It follows that his interest was in part derived fromsignificant criminal activity [19] We accept that it does not matter that the interest has been acquiredin a process of successive payments towards the mortgage; acquisition canclearly occur in stages. With each stage the extent of the interest increases.(Footnote omitted.)[70] That approach was also taken by this Court in Doorman v Commissioner ofNew Zealand Police.55 There, the Commissioner sought forfeiture of a propertyinitially acquired by Mr Doorman's partner, Ms de Leon, who had contributed all ofthe original equity with untainted funds. A mortgage was subsequently secured overthe property and Mr Doorman had paid a significant part of the mortgage repaymentsusing funds from the cultivation, sale and possession of cannabis. This Court, inupholding the High Court's assets forfeiture orders, held that Mr Doorman's interest53 Criminal Proceeds (Recovery) Act, s 5(1).54 Duncan v Commissioner of Police [2013] NZCA 477, (2013) 26 CRNZ 796.55 Doorman v Commissioner of New Zealand Police, above n 41.26in the property was, at least in part, tainted property.56 This Court also said it was notpossible to separate out Ms de Leon's initial contribution to the property which hadnot been derived from drug offending.57[71] In this case, repayments on the drawdowns were made from Mr Yim andMs Wu's joint ASB-52 and 55 accounts during the seven-year analysis period.In particular, as Ms Thompson's analysis shows, over $450,000 was repaid fromthe joint ASB-55 account in 2015 alone: that is, the equivalent of over half of the totaldrawdowns between 2007 and 2015. As Ms Wu did not challenge the forfeiture of thejoint ASB-52 and 55 accounts, and because we are satisfied the unexplained sourcesof funds were likely derived from significant criminal activity, the repayments tothe revolving credit facility were themselves tainted. With each repayment onthe drawdown from the joint ASB-52 and 55 accounts, Ms Wu's interest in IrelandRoad has derived, at least in part, from significant criminal activity. We are thereforesatisfied Ireland Road is tainted property.[72] We accordingly do not consider the Judge erred in making the assetsforfeiture orders.[73] Finally, as regards the profit forfeiture orders, we consider Ms Wu hadthe requisite knowledge of significant criminal activity. Mr Mansfield emphasisedbefore us that much of the cash was located away from Ireland Road, and so Ms Wudid not know about Mr Yim's criminal activity. We have already found the monies putthrough the CMC accounts and the money remitters were more likely than not derivedfrom significant criminal activity, and that Ms Wu had a role in that process ofmoney laundering. That satisfies the knowledge requirement. Moreover, Ms Wu —who had been in a relationship with and married to Mr Yim for the better part of12 years, with significant amounts of money and luxury assets with no explainedsources of legitimate income — had to have known about that activity.5856 At [36].57 At [32].58 Vincent v Commissioner of Police, above n 44, at [52].27[74] We record for completeness that Ms Wu's initial grounds of appeal hadchallenged the Judge's undue hardship finding, but by the hearing that ground was nolonger pursued.The Commissioner's withdrawn strike-out application: costs[75] We note one final matter. On 25 November 2020, the Commissioner filed anapplication to strike out Ms Wu's appeal for want of prosecution and failure to complywith procedural directions. In particular, the Commissioner referred to two breachesof timetabling orders, one by a few days, but the second by over two months. Thesecond of those breaches was the failure to apply for leave to adduce further evidencefrom Dr Duff, as to Ms Wu's mental health, by 28 September 2020. The applicationwas eventually made on 2 December 2020, filed along with an unsworn affidavit fromDr Duff.[76] The Commissioner subsequently withdrew the strike out application on16 December 2020. Nevertheless, in a memorandum of 28 January 2021,the Commissioner sought costs on the application. That being opposed by Ms Wu,this Court said it would deal with the issue of costs at the hearing. Ms Wu's counselexplained the delay in filing the application for further evidence was a result of thepressures caused by two COVID-19 lockdowns. In those circumstances, we thinkthe breaches of timetable directions are excusable, and decline costs on thatapplication accordingly.Result[77] The applications for leave to adduce further evidence are granted.[78] The appeal is dismissed.[79] The appellant must pay the respondent costs for a standard appeal on a band Abasis with usual disbursements.28[80] The application for costs on the respondent's withdrawn strike out applicationis declined.Solicitors:Dominion Law, Auckland for AppellantMeredith Connell, Auckland for Respondent