COMMISSIONER OF POLICE v DE WYS [2016] NZCA 634

COMMISSIONER OF POLICE v DE WYS [2016] NZCA 634 [21 December 2016]IN THE COURT OF APPEAL OF NEW ZEALANDCA214/2015[2016] NZCA 634BETWEEN THE COMMISSIONER OF POLICEAppellantAND RONNIE JOSEPH DE WYSFirst RespondentPENELOPE HELEN LOUISA DE WYSSecond RespondentHearing: 25 May 2016Court: Cooper, Clifford and Katz JJCounsel: R G Douch and T C Tran for AppellantD J Taylor for First RespondentR J Laybourn for Second RespondentJudgment: 21 December 2016 at 11.30 amReissued: 20 December 2017JUDGMENT OF THE COURTA The appeal is allowed.B The High Court judgment is set aside.C We find that the respondents have unlawfully benefitted from significantcriminal activity between 6 August 2003 and 6 August 2010.D The determination of the quantum of the unlawful benefit and therespondents' applications for hardship are remitted back to the High Courtfor determination.E The restraining orders in favour of the appellant are to continue until furtherorder of the High Court.____________________________________________________________________REASONS OF THE COURT(Given by Katz J)[1] The Commissioner of Police appeals a judgment of Faire J declining to makeprofit and assets forfeiture orders, pursuant to ss 50 and 55 of the Criminal Proceeds(Recovery) Act 2009 (CPRA), against the respondents, Ronnie and Penelope de Wys.1Background[2] Mr de Wys's father owned a farm on Arapuni Road, near Putaruru, until 2008.Mr de Wys worked on and later managed that farm. He and Mrs de Wys lived in ahouse on the farm property from 1990 until his father sold the farm in 2008 to StuartEdmeades.[3] Mr and Mrs de Wys then moved to a new farm that they had purchased on KihiRoad near Hauturu. The purchase was financed in large part from cash savings thatMr and Mrs de Wys had accumulated. This brought them to the attention of the policeFinancial Intelligence Unit, as their bank reported to the police that they had madecash deposits totalling approximately $320,000 in the months leading up to thesettlement of the purchase of the Kihi Road property.[4] An investigation commenced. Financial analysis undertaken by the policeindicated that the respondents had had access to over $700,000 of unexplained cashincome in the years preceding their purchase of the Kihi Road property.The respondents say that this income is simply the proceeds of various legitimate cashbusinesses that they operated over a period of many years, such as timber milling andthe sale of firewood, farm machinery and livestock.1 The Commissioner of Police v de Wys [2015] NZHC 540.[5] The police also found various cannabis related evidence during the course oftheir investigation. This included evidence of cannabis being cultivated in the maizecrop on the Arapuni Road property while the respondents farmed there and evidence,found approximately 18 months after the respondents had moved out, of a cannabisdrying operation in the roof space of the Arapuni Road property. The respondentsdeny any involvement in or knowledge of cannabis cultivation or sales while they wereliving at the Arapuni Road property (or indeed Kihi Road). Mr de Wys does admit,however, to being a personal user of cannabis.[6] As a result of the police investigation, the Commissioner brought theseproceedings seeking profit and assets forfeiture orders under the CPRA. He wasrequired to prove on the balance of probabilities that during the period 6 August 2003to 6 August 20102 the respondents unlawfully benefitted from significant criminalactivity.3 The significant criminal activity alleged is the cultivation4 and sale5 ofcommercial quantities of cannabis. The Commissioner says that the respondentsunlawfully benefitted from that activity in the sum of $729,558.62. He sought a profitforfeiture order for that amount. The Commissioner claims that Mr de Wys wasdirectly involved in cannabis offending and that Mrs de Wys must, at the very least,have been aware that the funds that she managed were not sourced legitimately.[7] The Commissioner's application failed in the High Court because the Judgewas not satisfied that the Commissioner had proved on the balance of probabilitiesthat the respondents had benefitted from the cultivation and sale of cannabis.The issue on appeal is whether the Judge erred in that finding.2 Being the relevant period of criminal activity in terms of ss 5 and 52 of the Criminal Proceeds(Recovery) Act 2009.3 Significant criminal activity is activity that would amount to either an offence punishable by amaximum term of imprisonment of five years or more, or from which property, proceeds orbenefits of NZ$30,000 or more have been directly or indirectly acquired or derived: s 6.4 The cultivation of cannabis is an offence against s 9 of the Misuse of Drugs Act 1975, whichcarries a maximum sentence of seven years' imprisonment.5 Selling cannabis is an offence against s 6(l)(e) of the Misuse of Drugs Act, which carries amaximum sentence of eight years' imprisonment.Circumstantial evidence — legal principles[8] The Commissioner submitted that Faire J failed to have proper regard to thefact that this is a circumstantial evidence case. As a result, the Judge is said to haveerred by considering (and then discarding) each strand of evidence in isolation, ratherthan focussing on the totality of the evidence. The correct approach is to consider thecombined effect of a number of separate items of evidence in order to determinewhether the Commissioner has proved, on the balance of probabilities, that therespondents were involved in cannabis cultivation and sale.[9] Circumstantial evidence allows a fact-finder to infer that a particular factexists, even if there is no direct evidence of it. A single piece of circumstantialevidence will generally allow for more than one explanation. However, a number ofseparate items of circumstantial evidence, when considered together, may stronglysupport the drawing of a particular inference. Circumstantial evidence derives its forcefrom the involvement of a number of factors that independently point to a particularfactual conclusion.6 The analogy that is often drawn is that of a rope: any one strandof the rope may not support a particular weight, but the combined strands are sufficientto do so.[10] It is only the ultimate issue in a circumstantial case that must be proved to therequired standard. In this case that issue is whether the respondents benefitted fromsignificant criminal activity. The Commissioner must prove that they did, on thebalance of probabilities. He is not required, however, to separately prove eachindividual strand of evidence to the balance of probabilities standard before the Courtcan take that evidence into account.7 In Thomas v R this Court observed that "[it] isthe totality of [the] narrative to which the formula 'beyond reasonable doubt' applies".8[11] The Commissioner says that the respondents have either been involved in thecultivation and sale of cannabis, or are the victims of an implausible and unlikely seriesof coincidences: that cannabis was grown on their property at Arapuni Road when they6 See R v Guo [2009] NZCA 612 at [49]–[52]; and R v Hoto (1991) 8 CRNZ 17 (HC) at 21.7 Thomas v R [1972] NZLR 34 (CA) at 38; R v Puttick (1985) 1 CRNZ 644 (CA) at 647; andNgarino v R [2011] NZCA 236 at [26].8 Thomas v R, above n 7, at 38.farmed there; that cannabis was dried in the ceiling space of the house they lived in onthat property after they left; and that they accumulated more than $700,000 in cashincome from unidentified sources while living at that property.[12] Accordingly, while it is necessary at the first stage of the analysis to considereach strand of evidence separately, it is only at the second stage, when the Courtconsiders the ultimate issue (whether benefit from significant criminal activity can beinferred from all of the evidence before the Court), that the standard and onus of proofbecome relevant.Did the Judge err in his approach to the evidence?[13] The Judge identified the following key strands of cannabis-related evidence.[14] First, cannabis plant remnants were found in the roof cavity of the house atArapuni Road where the respondents had lived until May 2008, in what appeared tobe a space used for drying cannabis. Faire J found that the Commissioner had notproved, on the balance of probabilities, that those remnants could be attributed to eitherof the respondents.[15] Second, there was evidence of the presence of cannabis and cannabisconstituents at four separate locations at the property at Kihi Road. Faire J found thatthis did not support an inference that Mr de Wys was involved in the cultivation ofcannabis for supply given the small quantities recovered.[16] Third, there was evidence from Terry O'Brien, a maize harvesting contractorwho claimed to have seen Mr de Wys removing cannabis from a maize crop in a fieldat the Arapuni Road property. Faire J found Mr O'Brien's identification of Mr de Wysto be unreliable.[17] The Judge described this evidence as comprising "the full extent of theevidence relied upon by the applicant to show involvement in a significant criminalactivity".99 The Commissioner of Police v de Wys, above n 1, at [74].[18] It is not entirely clear whether Faire J accepted that the evidence of over$700,000 in unexplained income was a further strand of circumstantial evidence thatcould be taken into account in determining whether cannabis offending had occurred,or not. He stated that:[78] The applicant's position is that the possession and use of unexplainedcash over a comparable period is evidence to be added to the evidential poolregarding significant criminal activity. Clearly, however, it does require, inthe first place, evidence of participation in the cultivation of cannabis.[19] Later in the judgment, however, he identified the relevant question as being:10 whether that inquiry, added to what material the police did uncover inrelation to cannabis, is enough to draw an inference on the balance ofprobabilities that the availability of cash to the respondents was as a result ofa significant criminal activity.[20] Ultimately, he concluded that:11 although one has some suspicions about the source of funds available tothe respondents, there is nothing like the degree of proof on the balance ofprobabilities from which one could draw the inference that they had beeninvolved in a significant criminal activity.[21] We accept Mr Douch's submission for the Commissioner that the Judgeappears to have largely considered each strand of evidence in isolation, includingwhether criminal activity could be inferred from that strand of evidence, on the balanceof probabilities. As a result the Judge may have underestimated the combined forceof all of the circumstantial evidence in the case. Analysed individually, each strandof evidence was found to be wanting. Having approached the matter in this way, bythe time the Judge came to consider the financial evidence he had already, in effect,concluded that the Commissioner had failed to prove that the respondents had beeninvolved in significant cannabis offending. The financial evidence was therefore seenas having little or no probative value in relation to that issue.[22] Given that this appeal proceeds by way of rehearing we will consider afreshthe various strands of circumstantial evidence relied on by the Commissioner. We willthen consider whether, in light of the totality of that evidence, the Commissioner has10 At [100].11 At [101].proved on the balance of probabilities that the respondents benefitted from significantcriminal activity.The evidence[23] The Commissioner's case is that the respondents have unlawfully benefittedfrom cannabis cultivation and sale between 2003 and 2008 while they were living atthe Arapuni Road property. The Commissioner does not allege that significantcannabis offending occurred at the Kihi Road property.Evidence of cannabis cultivation at the Arapuni Road property[24] The most significant evidence of cannabis cultivation on the Arapuni Roadproperty is that of Mr O'Brien, who worked for Cameron Bishop, the proprietor ofPrecision Harvesters, which undertook maize harvesting on the Arapuni Roadproperty over many years. Mr O'Brien's evidence was that on each occasion he wentto the property the centre three rows of maize were missing. He surmised that theyhad either been sprayed (to kill the maize plants) or pulled out of the ground.[25] Mr O'Brien's evidence was that the maize harvesting crew usually phoned thefarmer a few days before their arrival to let him or her know roughly when they wouldbe coming to harvest the maize. On the final occasion that Mr O'Brien visited theproperty he had been unable to make contact with Mr and Mrs de Wys in the daysbefore harvesting. Nor did he phone them on the actual day of the harvest to let themknow that the harvesting crew was on its way.[26] When Mr O'Brien arrived at the property he did not see Mr de Wys, althoughhe said that he had met him on the previous occasions he had visited. Mr O'Briencommenced harvesting the maize. As per usual, he noticed that there were three rowsmissing out of the middle of the paddock. It also looked like something had freshlybeen pulled from the empty rows that morning. Further, he could see some cannabisplants remaining in the centre rows. Mr O'Brien described the strip of cannabis plantsas being about 30 to 40 metres long and said that he was about 15 metres away fromthem when he saw them. Mr O'Brien then saw a person further down the paddock,whom he identified as Mr de Wys, carrying mature cannabis plants towards a stand oftrees on the property.[27] Although there was some confusion at trial as to when the relevant eventsoccurred, it was common ground on appeal that it was not in April 2007 or April 2008,as Mr O'Brien originally thought. Based on all of the evidence before the Court, theincident most likely occurred in April 2006. This is because it seems likely thatMr O'Brien harvested maize on the property on two previous occasions in 2005 and2006. This is consistent with Mr Bishop's recollection that Mr O'Brien had harvestedmaize on the property two or three times. Cross-examination of Mr O'Brien, and theevidence of the respondents and Mr Bishop, focussed on the timing of the incident andthe reliability of Mr O'Brien's identification of Mr de Wys. It was not put to MrO'Brien that he had lied or was mistaken about seeing cannabis plants in the maize ora man carrying mature cannabis plants. His identification of Mr de Wys was, however,strenuously challenged. He maintained that it was Mr de Wys that he saw.[28] We accept (and the evidence clearly supports) that Mr O'Brien did see maturecannabis plants and a person carrying them away towards a stand of trees. The Judgewas correct, however, to find that Mr O'Brien's identification of Mr de Wys wasunreliable. Mr O'Brien initially only had a momentary glimpse of the person in therear vision mirror of his harvester. He then saw that person for a matter of secondswhen he was turning the harvester. The person he saw had his back to him and waswalking away at about 60 to 70 metres in the distance. He did not see the person'sface.[29] The other strand of evidence relied on by the Commissioner in support of hiscontention that cannabis was grown on the Arapuni Road property was that ofMr Edmeades. He gave evidence that in December 2010 he found 30 to 40 plasticcontainers with soil in them in a swampy area of the farm under a willow canopy.Drainage holes had been cut in the containers, consistent with them being used forgrowing seedlings. The containers are the size of small bins or buckets. Mr Edmeadeswas aware of the police investigation and informed Detective Hopkins of what he hadfound. Detective Hopkins visited the farm and was shown the containers.[30] Mr de Wys's recollection was that there were only four such containers, andthat he used them for growing cabbage tree seedlings. Mr Edmeades's unchallengedevidence (which we accept) is that he found 30 to 40 containers. Mr Douch submittedthat the logical inference, when this evidence is considered in the context of all theother evidence in the case, is that cannabis seedlings were grown in the containers.[31] The final evidence on the issue of cultivation is that of Bryden Lane,Mrs de Wys's father. Mr Lane's evidence was that he and his wife would visit therespondents at the Arapuni Road property up to five or six times a year. At no timeduring his visits did he see anything that caused him concern or that was untoward.He saw no cannabis plants growing and no evidence of any unusual crop having beengrown.Cannabis remnants found at the Arapuni Road house[32] Following his purchase of the Arapuni Road farm, Mr Edmeades did not moveinto the house formerly occupied by the respondents. Rather, he rented it out to KitOgle and her partner. In late 2009 they called a plumber to make repairs to the headertank. The plumber, Tuiri Samuel, climbed through a manhole into the roof cavity toinspect the tank. While in the roof cavity he noticed some loose leaf cannabis withsome stalks attached lying on spread out newspaper. The cannabis was green and hadan odour. Mr Samuel deposed that he was familiar with the smell of cannabis. There"did not appear to be a lot of" cobwebs around the cannabis, but there were plentynear the header tank. Mr Samuel told Ms Ogle's partner of his find.[33] On 5 December 2009 Ms Ogle contacted the police and told them whatMr Samuel had found. She said that she had contacted the police because she did notwant to be blamed. Ms Ogle has a 1996 conviction for cultivating cannabis.[34] Constable Stephen Maddren visited the property the same day. He accessedthe roof space by standing on a ladder held by the occupants and inspected it with atorch. He noted newspaper spread over the ceiling joints with cannabis remnants onit consisting of twigs, leaf and head. He located 15 spread out newspapers, all dated2001. There were undisturbed cobwebs over the majority of the roof space andnewspaper. He removed cannabis weighing 60 grams. His evidence was that thecannabis appeared to be from a historic cannabis drying area. Police concluded thedrying area had been undisturbed for many years. No further inquiries were made atthat time.[35] Detective Jonathan Hopkins subsequently visited the address on 13 August2010 and inspected the roof space. The property was by now vacant. The roof spacewas warm, despite heavy winds and cold temperatures. Detective Hopkins observednumerous newspapers, some still folded and others spread out, situated at variousplaces over an area of approximately 30 square metres. There were six completenewspapers and 89 newspaper pages from various publications, including "DairyingToday". They ranged in date from February 1996 to March 2001. Numerous remnantsof cannabis leaf and stalk were still on the newspapers and also on the insulationbetween the ceiling joists. There was also a large pile of cannabis remnants, whichincluded cannabis seed and seed husks. The combined weight of the remnants ofcannabis leaf and stalk that he recovered was 28.6 grams.[36] In his affidavit of 7 October 2013 Mr de Wys deposed that access to the ceilingspace was by a manhole in the ceiling, which could only be accessed by a ladder. Hehad been in the ceiling a long time ago, to have a look and saw toys, papers andrubbish. He said that he had no knowledge of the cannabis remnants the police found,"[n]or [did he] know of the newspapers said to have been found on the ceiling". Incross-examination, however, Mr de Wys accepted that the newspapers dated to theperiod when he had lived in the house and that they would have been his newspapers.As for how they got into the roof space, he said:A. We threw the papers up there, they always went up in the roofQ. Sorry?A. Them papers were, I always chucked them up in the roof.[37] When asked why he would throw the newspapers up in the roof space,Mr de Wys said that he would keep them underneath the sink for a while and then putthem in a Woolworths bag on a shelf in the kitchen, in case he needed something thathad been in the newspaper recently or needed paper to start a fire. However, "in [his]laziness", he would then just push the newspapers up through the manhole into theroof instead of burning them. He said that "they all would've gone in there, everythingwent in there that you wanted to get out of the way, storage sort of you know". Thisevidence would not explain the spread out sheets of newspaper, or the placing ofcannabis on them. Mr de Wys's attention was drawn to the fact that the newspapersdated from 1996 to 2001. He confirmed that he had put newspapers up in the roof "foryears" but was unable to explain why only six papers (and 89 additional loose pages)were found by the police during their search of the roof space.[38] It is clear from the evidence that at some stage the roof space of theArapuni Road property was used to dry fairly significant quantities of cannabis. Thekey issue, which we address further below, is whether the respondents or thesubsequent tenants were responsible for that use.The police search of the Kihi Road property[39] A search warrant was executed at the respondents' current address onKihi Road on 10 August 2010. Mr de Wys was present. A small amount of cannabis,consistent with personal use, was found. Mr de Wys admitted to being a personal userand that the cannabis was his. He was charged with possession of cannabis, to whichhe pleaded guilty in the Te Awamutu District Court on 27 October 2010.[40] Constable Aaron Lunt also located a black plastic rubbish bin with a lid insidea large blue feed bin. This was found in a hill paddock situated above the dwellingand towards the back of the farm. He noted a strong cannabis smell. He laterquestioned Mr de Wys about the smell and Mr de Wys replied "it shouldn't do, I useit to run water to some of the stock up here".[41] Ms Deborah Siegers, a forensic scientist at Environmental Science andResearch in Auckland, later examined the bin. Her analysis revealed that it containedtraces of cannabis constituents. Mr Douch submitted that this was consistent with thebin having been used, at some stage, for the large scale storage of cannabis.[42] In his affidavit of 7 October 2013, Mr de Wys deposed that the likely reasonwhy cannabis constituents were found in the black bin was that he had hidden a smallamount of cannabis he had for personal use in the bin when it was in the implementshed. Later he had used the bin to carry water for stock. Under cross-examination Mrde Wys offered a somewhat different explanation. He said that the presence ofcannabis constituents would have been from him throwing his smokes and butts intothe bin.[43] Mrs de Wys asked the police executing the search warrant who had sent themthere. During a second search of the respondents' home, on 4 November 2010, a notewritten by Mrs de Wys was found. That note included the following passage:Some people supplied by ronnie.informer – undercoverd police officewon't exclose the person.remote chance of that.[44] In her evidence Mrs de Wys acknowledged that during the police search shehad asked who had told the police to come to her house. She also confirmed that shehad written the above note and that it recorded things she had been told. She said thatthe note related to a telephone conversation she had with Paul Fisher, a lawyer. Sherejected the suggestion that the note related to involvement in drug offending.Evidence of significant unexplained income[45] The police investigation into the respondents' activities was prompted by areport from the respondents' bank to the police Financial Intelligence Unit. The bankreported that between 8 January 2008 and 26 May 2008 numerous cash deposits (in$20 denominations) had been made into the respondents' bank accounts, totallingapproximately $320,000. The cash smelled of mould. It was deposited by Mr andMrs de Wys and, on some occasions, other people.[46] When questioned by the bank, Mr and Mrs de Wys said that they were sellingfarm equipment on Trade Me. Police inquiries with Trade Me, however, could onlyaccount for $8,466 of that sum. Inquiries with the Inland Revenue Departmentrevealed that the respondents' declared income could not explain access to cash at sucha significant level.[47] The cash deposits were made in the months preceding the respondents'purchase of the Kihi Road property. Mr de Wys's evidence was that the purchase ofthat property was financed in part from cash that he kept stored in a tin box buriedunder his house, which had been earned legitimately over a period of many years. Hesaid that he had stored cash in that way since childhood to keep it away from his father(who had taken money and a gift off him as a child). In addition, his literacy problemshad made it difficult for him to open a bank account. His wife opened one for him in1994 and he has held bank accounts since then (operated by his wife). The respondentsoperated three bank accounts, excluding loan and savings accounts, by 2008.[48] Laura Clay, a financial analyst employed by the police, undertook an analysisof the financial affairs of the respondents for the period between 20 December 2004and 16 July 2010. Her initial calculations indicated that the respondents received$806,439.97 in cash income during that period, in respect of which no source couldbe identified. The respondents' expert, Dennis Parsons, was subsequently able tosatisfy Ms Clay that $76,881.35 of that sum had been sourced legitimately, forexample from machinery sales. As a result, the benefit figure claimed by theCommissioner was reduced to $729,558.62 (the unexplained cash).[49] The experts agreed that the unexplained cash figure of $729,558.62 could befurther reduced "on the acceptance by the Court as to the source of these funds". Therespondents' position is that all of the unexplained cash was accumulated legitimately.[50] The respondents first provided explanations for $416,379.99 of theunexplained cash. This included 14 specific explanations (totalling $44,189.59)proposed by Mr Parsons but rejected by Ms Clay. The remaining $372,190.40 wasexplained by the respondents' analysis of the various sources of their cash incomeduring the period 1 June 2001 to 31 May 2008, as set out in "the red book". The redbook was prepared by Mrs de Wys between the first police search in August 2010 andthe second police search in November 2010. Mrs de Wys's evidence was that the redbook was prepared for tax purposes in an attempt to calculate the income earned overthat period that had not been declared to the Commissioner of Inland Revenue. Mrsde Wys acknowledged that she had no supporting records to refer to in compiling thered book. Rather, it was based solely on Mr de Wys's memory.[51] Mr Parsons analysed the various categories of revenue set out in the red book.The key items were firewood sales ($31,700); dumping fees ($30,000); livestock fees($98,550); machinery sales ($94,500); and scrap metal sales ($86,300). Mr Parsonsconfirmed in his affidavit that he had not been able to validate the figures asserted.[52] To take one example, the red book records that, in December 2007, 300 tonnesof scrap metal were sold at $200 per tonne, bringing in $60,000 in cash. This is saidto have comprised items such as car bodies that were dumped on the farm. Mr de Wyswas cross-examined on this entry as follows:Q. For your notation from the 1st of June 2007 through to the 31st ofMay 2008, you recall that in December '07, there was 300 tonnes ofscrap metal at $200 a tonne sold for a return of $60,000?A. Yeah. I'm not too sure on that $200 a tonne because it wasn't sold asa tonne.Q. $60,000 cash?A. Yeah.Q. Who from?A. From the scrap man.Q. Who is he?A. I don't know, I don't know his name. All I know, all I thought, justknown him as Santa Claus.Q. Sorry?A. All I've known him as Santa Claus, you know that's, I just have anicknames for sort of —Q. What sort of truck did he come in, what was written on it?A. Oh, it didn't have nothing written on it, it was –Q. Nothing written on it?A. No.Q. How many truckloads is 300 tonnes?A. I don't know but all I know is that it had 20, 20K, 20,000kgs on the,on the back of the hub, on the thing, on the, um —[53] No customers of any of the cash businesses gave evidence. The onlycorroborating evidence in relation to the various cash businesses was that of Mr Lane.He gave affidavit evidence of the improvement and development of both the Arapuniand Kihi Road properties. He also referred, somewhat in passing, to firewood beingsold, as well as "large quantities" of timber being milled. He deposed that "It is worthmentioning that Ronnie and Penelope have used both their digger, mill and tractor asan income earner off the farm." Mr Lane was not cross-examined.[54] If the respondents' evidence as to the various sources of their cash income wasaccepted in its entirety, then the unexplained cash balance would reduceto $313,178.63.[55] In relation to this remaining balance, Mr de Wys's evidence was that there was$230,000 in the tin box buried under the house by the year 2000. If this is deductedfrom the $313,178.63, the unexplained cash reduces to about $83,000.00. Mr Taylorsubmitted for the respondents that this sum could be attributable to either the time gapbetween the beginning of 2000 and the commencement of the period covered by thered book (1 June 2001); possible Trade Me sales prior to 28 June 2006; or the frailtiesof human memory, given that the red book was prepared from memory in late 2010and went back to 1 June 2001.[56] The red book cash analysis indicates that the incoming cash tapered off afterthe move to the Kihi Road property in 2008. The respondents' evidence was that therewere more limited opportunities to operate cash businesses at Kihi Road. TheCommissioner submitted, on the other hand, that the drop off in cash income isconsistent with significant cannabis offending having occurred at the Arapuni Roadproperty.Analysis of the evidence[57] The key issue on appeal is whether the above evidence, considered in totality,is sufficient to prove on the balance of probabilities that the respondents benefittedfrom significant criminal activity.Evidence of cannabis cultivation at the Arapuni Road property[58] In our view the probative value of Mr O'Brien's evidence is fairly high. Therespondents did not challenge that he saw cannabis growing in the maize crop, butfocussed on the reliability of his identification of Mr de Wys. We have concluded thatthe Judge was correct to reject Mr O'Brien's positive identification of Mr de Wys.That does not mean, however, that the Court cannot infer, based on the totality of theevidence, that the man Mr O'Brien saw must have been Mr de Wys.[59] It was common ground that the man was either Mr de Wys or an unknownintruder onto the property. There were no other adult males living on the farm. If theintruder scenario is correct, then an unrelated member of the public elected to grow avaluable cash crop on the respondents' farm and assume the risk of discovery anddestruction of it by the respondents. Based on Mr O'Brien's evidence, this occurredin three successive years. Further, when the maize harvesting contractors arrived atthe property without any advance warning in 2006, the intruder was able to respondimmediately to the threat to the cannabis crop posed by the harvesters. He removedthe cannabis to safety.[60] Even when this evidence is considered in isolation we find the intruder scenarioto be implausible. It becomes even more implausible when Mr O'Brien's evidence isconsidered together with the other strands of evidence relied on by the Commissionerto link the respondents to cannabis offending. The logical inference is that Mr de Wyswas the cultivator of the cannabis and also the unidentified man who removed thecannabis plants and walked away with them towards a stand of trees.Cannabis remnants found at the Arapuni Road house[61] We now turn to the evidence of the cannabis drying facility in the roof spaceat Arapuni Road. Again, there are only two realistic possibilities as to who set that up.It was either the respondents (who lived there for 18 years from 1990 to 2008) or thesubsequent tenants, who moved into the house some time after May 2008 and movedout some time prior to August 2010. In our view it is inherently unlikely that thesubsequent tenants, if they were using the roof space for drying cannabis, would calla plumber to fix the header tank in the roof space and then hold the ladder for himwhile he climbed up into the roof space without first removing all evidence of theircannabis related activities. That is particularly so given that, on this scenario, thedrying room would have been fairly recently established.[62] Further, the newspapers that the cannabis remnants were spread out on all datedto the respondents' occupation of the property. Mr de Wys admitted at trial that thosepapers belonged to him. His explanation of having thrown the papers through themanhole and up into the roof space because he was "too lazy" to do anything else withthem is inherently implausible, particularly given that the manhole can only beaccessed with a ladder. Further, his evidence of having thrown many years' worth ofnewspapers into the roof space was not supported by the evidence obtained from thepolice search. We also note that Mr de Wys initially denied any knowledge of thenewspapers in the roof space in his affidavit, but then claimed in cross-examination tohave put them there. Such inconsistencies undermine his credibility.[63] We also note that both Mr Samuel and Constable Maddren gave evidence ofcobwebs in the roof space. This evidence suggests that the space had not been usedfor some time.[64] The respondents' counsel submitted that the logical inference is that the dryingspace was set up by the subsequent tenants. They were living there when the plumberfound the cannabis and Ms Ogle has a conviction for cultivation of cannabis.[65] In support of this, counsel said it is implausible that the respondents wouldhave left behind a total of 90 grams of valuable cannabis if they were commercialcannabis dealers. We do not find this implausible. It is apparent from both theevidence and the photographs produced as exhibits that the cannabis left behind wasremnants dispersed across a wide area of roof space, including in the insulation andbetween the ceiling joints. It included stalks and husks that likely had minimalcommercial value. If anything, the fact that 90 grams of remnants were left behind(together with the fact that the spread out newspapers covered about 30 square metres)tends to indicate the fairly significant scale of the cannabis drying operation that wasundertaken.[66] Counsel for the respondents also relied on Mr Samuel's evidence that thecannabis was green and had an odour as suggesting that it must have been harvestedrelatively recently. Mr Douch rejected that submission and suggested that driedcannabis is always green and dealers do not sell brown cannabis. There is no evidencebefore us as to whether it is possible to date how old cannabis is by its colour andodour. We do note, however, that the photos of the cannabis remnants show that thecannabis remnants were still green in colour when Detective Hopkins returned to theproperty about eight months after Mr Samuel's initial visit.[67] In our view, taking into account all of the evidence we have outlined, it issignificantly more likely that the cannabis drying area in the roof is attributable to therespondents than to the subsequent tenants. That likelihood increases further whenthis evidence is considered in the broader context of all of the circumstantial evidencein this case, including Mr O'Brien's evidence and the respondents' access to very largesums of unexplained cash throughout their latter years of living at the Arapuni Roadproperty (discussed in detail below).Evidence of significant unexplained income[68] We now turn to consider the final major strand of evidence, namely the sum of$729,558.62 in unexplained cash that both experts agree was available to therespondents during the period from 20 December 2004 to 16 July 2010.[69] The respondents' position is that this cash represents the proceeds of a numberof legitimate cash businesses that were conducted over a period of many years. Thosecash businesses were lawful, albeit the respondents admit that they did not pay incometax on the cash revenue received. They have now regularised their tax position withthe Inland Revenue Department.[70] The Commissioner's case, on the other hand, is that the unexplained cash isthe sale proceeds of the commercial quantities of cannabis that the respondentscultivated.[71] We accept the Commissioner's submission that the possession of large sumsof unidentified income is potentially very significant. If the cash sums cannot beadequately explained then this will tend to support an inference that the relevant cashhas been sourced from illegitimate or criminal activity. Referring to the othercircumstantial evidence in this case will then assist in determining the likely nature ofsuch activity.[72] The respondents first came to the attention of the police by making numeroussmall bank deposits over several months. At times third parties made deposits intotheir accounts on Mr and Mrs de Wys's behalf. Their explanation for the cash (thatthey had been selling farm equipment on Trade Me) could only account for a verysmall portion of the cash.[73] The respondents' explanation for the $729,558.62 in unexplained cash fallsinto two main categories, the red book evidence and the tin box evidence. As we havepreviously noted, where evidence was provided to Ms Clay of a specific cash source,for example relating to identifiable purchases of machinery or livestock, those sumswere deducted from the unexplained cash figure. The balance of $729,558.62remaining therefore relates solely to cash income where no source could beindependently validated by either Ms Clay or Mr Parsons.[74] As mentioned, the red book is an after-the-event reconstruction by therespondents of their income sources for the relevant period, based solely onMr de Wys's memory. Their evidence was that it was prepared primarily for thepurposes of regularising their tax affairs.[75] It is significant, in our view, that there is no paper trail to support any of theremaining items included in the unexplained cash figure. We accept that therespondents would not have kept detailed accounts, given that they were not payingtax on their cash income. Nevertheless, we would expect that cash businesses of themagnitude claimed would generate at least some documentation. For example,documentation was provided in relation to some machinery sales and credit was givenfor those sales. There is no documentation, however, in relation to the remainingmachinery sales of almost $100,000. Mr de Wys deposed that this related to suchthings as farm machinery that he sold on the side of the road. Although it is possiblethat some machinery may have been sold on the side of the road, it is inherentlyimplausible that almost $100,000 of it was. Further, one would expect at least someof the purchasers of machinery sold in this way to be local and therefore identifiable.[76] To generate cash of the magnitude claimed, a very significant number ofcustomers must have been involved, including those who paid livestock fees,purchased machinery, scrap metal or firewood, or paid to dump cars or other items onthe farm. Not one such person provided corroborating evidence, however.[77] The inherent implausibility of the sheer scale of some of the businesses isfurther illustrated by the claimed sale of $60,000 worth of scrap metal to "Santa Claus"in December 2007 (details of which are set out at [52] above). It is simply not crediblethat, over the space of a few weeks (at most), an individual who was completelyunknown to the respondents and who did not even give them his name or that of hisbusiness paid them $60,000 in cash for scrap metal.[78] The respondents clearly operated some legitimate cash businesses. But theyhave already been given credit for all of the cash transactions that can be verified.Given the sheer scale of the unexplained cash remaining, and the fact that none of itcan be verified as coming from legitimate sources, the inevitable inference is that avery significant portion of it has been sourced from unlawful activity.[79] We now turn to the tin box evidence. The significance of this evidence is that,if Mr de Wys had indeed saved $230,000 in a tin box under his house by the year 2000,then the amount of unexplained cash that can have been accumulated by therespondents during the period of significant criminal activity relied on by theCommissioner will have to be reduced by that amount (unless the financial analysisindicates that the money saved as at 2000 must have been spent prior to 6 August2003).[80] Mr de Wys deposed that he could specifically recall having $230,000 in"new plastic money" in the tin under the house by the year 2000, because it was theturn of the century. Detective Hopkins obtained information from the Reserve Bankthat modern generation bank notes were first released in May 1999 ($20 notes) andOctober 1999 ($10 notes). Mr Douch submitted that it was implausible that $230,000in "new plastic money" could have been accumulated from lawful sources in such ashort period of time. (Indeed even if the sum was sourced from cannabis dealing it isdifficult to see how such a significant sum could have been accumulated in such ashort period.) Counsel for the respondents submitted, however, that Mr de Wys'sevidence should not be disbelieved solely on the basis of his reference to "new plasticmoney", when he was not cross-examined on precisely what he meant by that, or howhe came to have all his savings in "new plastic money". For example, he could haveexchanged some of his old notes for new notes. We accept that submission.[81] The Commissioner did not dispute that Mr de Wys kept money hidden in a tinbox under his house. Indeed Mr de Wys's evidence on this issue is inherentlyplausible, given the extent of cash savings (however sourced) that he kept outside thebanking system. It is quite possible that Mr de Wys may have had a significant sumin the tin box by the year 2000. We are somewhat sceptical that that sum would havebeen as great as $230,000, particularly given that Mr de Wys had to incur thesignificant expense of purchasing the dairy herd from his parents only five yearspreviously. For present purposes, however, we will err in Mr de Wys's favour andassume that there was $230,000 in the tin box by 2000.[82] However, even disregarding any cash that may have been in the tin box as at 1January 2000, and any other cash that may have been accumulated (lawfully orotherwise) by the respondents prior to 6 August 2003, it is clear that a substantialamount of unexplained cash was available to the respondents during the period from6 August 2003 to 6 August 2010. As we have already noted, the lack of anycorroborating evidence of cash businesses on the considerable scale claimed by therespondents supports the inference that a very significant portion of this cash wassourced from unlawful activities.Absence of current evidence of cannabis offending[83] Faire J accepted the respondents' submission that it was significant that thepolice had failed to find any evidence in their two searches of the Kihi Road propertyof items associated with cannabis offending such as electronic scales, packagingmaterial, customer lists and so on. We accept Mr Douch's submission that thisoverlooks that the Commissioner's case (at least in this Court) is not based uponcannabis cultivation and sale at the time of the police searches in 2010. Rather, theCommissioner's case is that cannabis was cultivated at the Arapuni Road property andsubsequently dried, processed and sold at that property. Further, even on therespondents' own analysis, most or all of the unexplained income dates to the periodwhen they lived at Arapuni Road.Conclusion[84] In conclusion, taking into account all of the strands of circumstantial evidencerelied on by the Commissioner, we are satisfied that he has proved, on the balance ofprobabilities, that the respondents benefitted from significant criminal activity duringthe relevant period. As with most circumstantial cases, any one strand of evidence,considered in isolation, would not have been sufficient to prove the Commissioner'scase to the requisite standard. However, all of the circumstantial evidence, whenconsidered together, strongly supports the inference that from 6 August 2003, untilthey moved to the Kihi Road property in May 2008, the respondents were involved in(and benefitted from) cannabis cultivation and sale on a commercial scale. Theproposition that they were the innocent victims of an implausible and unlikely seriesof coincidences linking them to various aspects of cannabis offending is simplyuntenable.[85] Our conclusion is further supported by the remaining circumstantial evidence(albeit of somewhat less probative value) of cannabis cultivation and sale that was notanalysed in detail above. This includes the note written by Mrs de Wys, the seedlingcontainers found by Mr Edmeades (which could have been used to cultivate cannabis)and the black drum found at Kihi Road. Mr de Wys's claim that he stored a smallamount of cannabis, for personal use, in the drum is not particularly credible. We alsonote his changing evidence as to the likely reasons why the drum tested positive forcannabis constituents, as set out at [42] above.Value of the benefit received by the respondents[86] The value of the benefit received by the respondents during the relevant periodis presumed to be that stated in the Commissioner's profit forfeiture application, unlessthat presumption is rebutted by the respondents on the balance of probabilities.[87] Given his conclusion that the Commissioner had not proved that therespondents had benefitted from significant criminal activity, it was not necessary forFaire J to make a formal finding as to whether the evidence adduced by the respondentspersuaded him, on the balance of probabilities, that the figure stated by theCommissioner should be reduced by a particular amount.[88] Unfortunately, determining the precise value of the benefit received is unlikelyto be entirely straightforward. Indeed, the Judge was clearly of the view that at leastsome further financial evidence, together with supporting submissions, would likelybe necessary in order for the Court to fully analyse the issues relating to theunexplained cash.12 In addition, if the Commissioner wishes to advance thesubmissions made in this Court on the plastic money issue then that matter will needto be put to Mr de Wys for comment, as any unexplained cash that was accumulatedprior to 6 August 2003 (even unlawfully) will likely need to be excluded from thevalue of the benefit received by the respondents.[89] Mr Douch submitted that, given this appeal proceeds by way of rehearing, itwas open to us to simply determine the value of the benefit received on the existingevidence, rather than remit the matter back to the High Court. We are not prepared toadopt such a course as it would deprive the respondents of an appeal right in respectof this issue.The respondents' undue hardship application[90] As is commonly the case, the Commissioner's application sought both anassets forfeiture order and a profit forfeiture order. At trial the sole focus was on theprofit forfeiture order and the assets forfeiture order was not pursued. The respondents12 The Commissioner of Police v de Wys, above n 1, at [91]–[95].appear to have anticipated, at some stage at least, that the assets forfeiture order wouldbe the primary focus, as they both filed hardship applications pursuant to s 51 of theCPRA, which relates to assets forfeiture orders. We understand from counsel,however, that their general intention was that the hardship applications would applyto both the assets and profit forfeiture applications. The inquiry is essentially the sameunder both ss 51 and 56 of the CPRA.[91] Hardship issues have not yet been considered and determined by theHigh Court. Given the Judge's finding on the substantive application it was notnecessary for him to do so. As a result of our decision to allow the appeal, the hardshipapplication (amended, as necessary, to include the profit forfeiture application) willnow have to be determined. Whether this requires the filing of additional evidencewill be a matter for the parties and the High Court.Result[92] The appeal is allowed. The High Court judgment is set aside. We find thatduring the relevant period of criminal activity (6 August 2003 to 6 August 2010) therespondents have unlawfully benefitted from significant criminal activity, namely thecultivation and sale of the class C controlled drug cannabis.[93] Determination of the quantum of the unlawful benefit received during therelevant period is remitted back to the High Court, together with the respondents'hardship applications.[94] The restraining orders in favour of the Commissioner are to continue in forceuntil further order of the High Court.Solicitors:Crown Solicitors, Hamilton for AppellantKit Clews Law Limited, Hamilton for First RespondentGavin Boot Law, Hamilton for Second Respondent