COMMISSIONER OF POLICE v BOON HOOI CHEAH [2018] NZHC 2825

COMMISSIONER OF POLICE v BOON HOOI CHEAH [2018] NZHC 2825 [31 October 2018]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2016-404-1926[2018] NZHC 2825UNDER the Criminal Proceeds (Recovery) Act 2009BETWEEN COMMISSIONER OF POLICEApplicantAND BOON HOOI CHEAHRespondentHearing: 24 and 25 September 2018Counsel: DMA Wiseman and L Fraser for the ApplicantW M McKean and N J Hartwell for the RespondentJudgment: 31 October 2018JUDGMENT OF GRICE JContentsIntroduction [1]Assets forfeiture order [8]Significant criminal activity [15]The cash [16]The term deposits [18]Is the ASB term deposit tainted? [28]Is the Westpac term deposit tainted? [28]Conclusion [37]Profit forfeiture order [38]Significant criminal activity and unlawful benefit [45]The Comissioner's submissions [55]Mr Cheah's rebuttal [67]Conclusion [76]Calculation of maximum recoverable amount [87]Undue hardship [89]Conclusion [98]Costs [103]Introduction[1] Mr Cheah is serving a term of six years' imprisonment following his convictionfor supplying methamphetamine. The charges on which he was convicted relate tofour separate incidents occurring between 31 May and 31 June 2016 when he and anassociate, Brett Wagner, supplied an undercover police officer with the drug.[2] When police officers searched Mr Cheah's home at Great North Road,Auckland on 29 July 2016 they found 293.88 grams of methamphetamine, electronicscales, numerous zip lock bags and cash amounting to $70,520. They also found adiary in which Mr Cheah had recorded his drug dealing activities over a period of74 days from 16 May to 28 July 2016. It recorded the amounts he received on variousdays during that period. The total sale proceeds recorded amounted to $99,450.[3] That diary assumes some importance in this case, as the Commissioner hasextrapolated the information from the 74 days to estimate an income in excess of$1.8 million from Mr Cheah's drug dealing. In total, the Commissioner saysMr Cheah has unlawfully benefited by $2,102,179 from drug dealing.[4] The Commissioner is seeking orders that Mr Cheah forfeit not only the cashthat was found, but his half share interest in the property at Great North Road and thecontents of his Westpac and ASB accounts. These assets are at present the subject ofrestraining orders.1 The deposits and cash are presently held by the Official Assignee.[5] Applications for forfeiture orders are civil matters brought under the CriminalProceeds (Recovery) Act 2009 (the Act).2 The Act establishes a regime for theforfeiture of property that:3(a) has been derived directly or indirectly from significant criminalactivity; or(b) represents the value of a person's unlawfully derived income.1 Criminal Proceeds (Recovery) Act 2009, s 25.2 Section 10(a) to (c). Subsection (d) refers to foreign restraining orders.3 Section 3(1).[6] The Act sets out a scheme for the restraint and forfeiture of property withoutthe need for a conviction for the alleged criminal activity.4 The objective of the regimeis to:5(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, orother significant criminal activity, to continue or expand criminalenterprise.[7] In this case, the Commissioner seeks orders for assets forfeiture and profitforfeiture. These may overlap.Assets forfeiture order[8] For an asset forfeiture order to be made, the Commissioner must establish onthe balance of probabilities that the property is "tainted property" pursuant s 50(1) ofthe Act.[9] A key concept when considering assets forfeiture, as opposed to profitforfeiture, orders is that of "tainted property". It is defined in s 5 of the Act to includeproperty that has, wholly or in part, been acquired as a result of significant criminalactivity or directly or indirectly derived from significant criminal activity. If the Courtis satisfied on the balance of probabilities that the specified property is taintedproperty, the Court must make an assets forfeiture order in respect of that property.6[10] The definition of tainted property is very broad. Property is captured if it wasacquired or derived wholly or in part from significant criminal activity. This is inkeeping with the intent that the legislation has "[a] maximum deterrent effect".74 Section 4(1)(a).5 Section 3(2).6 Section 50.7 Tareha v Solicitor-General (1996) 13 CRNZ 487 (CA).Property is also captured under the definition of tainted property if it has beenderived/acquired from more than one activity as long as one of those activities is asignificant criminal activity. The respondent need not be engaged in significantcriminal activity as long as the property was wholly or in part derived from significantcriminal activity.8[11] "Significant criminal activity" is defined under s 6 of the Act as an activity thatif treated as a criminal offence would be punishable by a maximum term of 5 yearsimprisonment or more; or $30,000 or more of profits, proceeds or benefits result.[12] The Court may exclude certain property from an assets forfeiture order if itconsiders that, having regard to all of the circumstances, undue hardship is reasonablylikely to be caused to the respondent if the property is included in the assets forfeitureorder.9[13] Therefore, the assets forfeiture order provisions are largely focussed on theacquisition or derivation of (usually) identifiable assets acquired as a result ofsignificant criminal activity. The assets may be directly or indirectly derived from theactivity.[14] As I have noted above, the assets forfeiture regime focuses on the notion of"tainted property". In this case, the Commissioner says that the $70,520 in cash foundin Mr Cheah's closet at the time he was arrested and his ASB and Westpac termdeposits (term deposits) should be made subject to assets forfeiture orders.Significant criminal activity[15] There is no contest that Mr Cheah's drug dealing was significant criminalactivity. He was convicted of four charges of supplying methamphetamine and hasadmitted other drug dealing.8 Doorman v Commissioner of Police [2013] NZCA 476.9 Criminal Proceeds (Recovery) Act 2009, s 51.The cash[16] The Commissioner says the cash was acquired or derived, in whole or in part,from Mr Cheah's drug dealing. It was found in the same wardrobe in which themethamphetamine was discovered. Mr Cheah accepts most of it was acquired throughmethamphetamine dealing.[17] The cash is plainly tainted, as at least part of it was acquired through drugdealing.The term deposits[18] Turning to Mr Cheah's term deposits. The Westpac term deposit contains$298,078.08 and is restrained. When opened in 2009 it contained $257,480.64. Itincreased by $40,957.44 during the relevant period. The ASB account presently holds$50,000.14. The Commissioner argues that Mr Cheah would have needed to draw onhis term deposits to pay for his living expenses and methamphetamine habit, had henot been using the profits from his sale of drugs. The Commissioner's submission isthat the funds in both accounts have been indirectly (as opposed to directly) derivedfrom significant criminal activity.[19] Mr Cheah argues that there is an insufficient connection between his drugdealing and the term deposits to establish even an "indirect" acquisition or derivationof the funds in those accounts from the drug dealing.[20] Mr Cheah says, in any event, his expenses were few as he was frugal and hedid not need to use any more money than he did legitimately draw out of the accountsfor his living expenses. In addition, he argues he was selling various cosmetic andperfume products to earn money on the side. This contributed to his living expenses,and also his methamphetamine habit, during the time he was unemployed.[21] The Commissioner submits Mr Cheah put deposits into those bank accountswhich cannot be explained and therefore the inference is that the deposits were fromthe profits of drug dealing.[22] No deposits were made into the Westpac term deposit during the relevantperiod.[23] Turning to the ASB term deposit, the Commissioner points to two depositstotalling $13,000 from Mr Cheah's ASB wage account into the term deposit. Thesedeposits were specifically noted as being made following a total of $31,918.43 inunexplained funds being deposited into Mr Cheah's ASB wage account. This amountcan be split into two subcategories:(a) six unexplained deposits totalling $10,458.43. A combined total of$106.63 was deposited on 24 June 2011 and 7 August 2012. These arenarrated by the bank teller as cheques. Given the small amounts ofthose I put them to one side as not relevant to the present assessment.An additional four deposits are of amounts each in the vicinity of$2,500. These are narrated "Treasury MPA transfer credit". In hisevidence, Mr Cheah said that these four payments were returns onmoney he had remitted to his father in Malaysia. The amount heremitted was about $40,000. He said it was for his father to invest inMalaysia. Mr Cheah says he had not seen the detailed statements whichshowed the returns before he gave his evidence at this hearing. Therelevant payments were made in December 2013, June 2014 and June2015. They were shown to Mr Cheah in the course of his cross-examination.(b) two unexplained deposits totalling $21,515. This is made up of fourdeposits. A total of $25 was deposited on 5 February 2013 and $30 on11 July 2013. These are narrated by the bank teller as teller assisteddeposits. Two other deposits were made in cash and coins. The firstwas on 15 August 2011 and totalled $10,290. The second was a cashdeposit on 7 November 2011 into a separate ASB bank accountbelonging to Mr Cheah, and transferred to his wage account on4 January 2012. It totalled $11,170. Mr Cheah was unable to explainthese deposits.Is the ASB term deposit tainted?[24] Mr Cheah accepts there were unexplained cash deposits made into the ASBwage account totalling $21,515. Most of this money was received in August andNovember 2011. Mr Cheah now says it was not from selling perfume or otherproducts. His wages were paid electronically. There is explanation for those fundsexcept as being the proceeds of drug dealing.[25] I find the sum of $21,515 is drug money deposited into the ASB wage account.Accordingly, in my view that amount has tainted the ASB wage account.[26] The sum of $13,000 from this now tainted money was deposited into the ASBterm deposit. The evidence is that the Westpac account contains in the vicinity of$50,000. Therefore, the deposit makes up a good portion of the funds in this account.This, in my view, is enough to taint the term deposit and cannot be dismissed asinsignificant. Even modest contributions to an asset is sufficient to taint the asset.Courtney J found that modest contributions to mortgage repayments were sufficient totaint funds used to acquire a property.10[27] Accordingly, I find that the ASB term deposit account is tainted and should bethe subject of an asset forfeiture order. Now I turn to the Westpac term deposit.Is the Westpac term deposit tainted?[28] A different issue arises with the Westpac term deposit.[29] The Commissioner argues that the Westpac term deposit was indirectly derivedfrom the relevant significant criminal activity and indirect tainting has occurred.Essentially, by using the illegitimately obtained funds for day to day living expensesand buying methamphetamine, Mr Cheah's legitimately funded Westpac term depositwas "indirectly derived from significant criminal activity". The tainting of the accounthas occurred by virtue of what was not spent rather than by direct deposits into theaccount.10 Commissioner of Police v Winsor [2014] NZHC 161.[30] I have found below at [79] that Mr Cheah could not have funded his livingexpenses and his methamphetamine habit other than by way of profit from his drugdealing. Therefore, he would have had to have used funds from his bank accounts topay his for needs. I find that Mr Cheah would have had to use the money in the bankdeposits and accounts for living and funding his purchase of drugs as he had no incomefrom other sources.[31] This issue was recently considered by Dunningham J in Drake, in relation to ahouse property and a bank account.11 In that case, the argument was that unlawfulbenefit payments had indirectly facilitated the accumulation of savings and theacquisition of the house. Dunningham J rejected that argument when she said.12[110] the word "tainted" is generally understood to mean something thathas been touched, tinged or imbued with some bad or undesirable quality.Thus, when the definition of tainted property refers to property which is"directly derived from significant criminal activity", I consider there mustnevertheless be some traceable connection between the proceeds of crime andthe property so acquired or retained. (Footnotes omitted)[32] Her Honour commented that while the provisions of the act are harsh she didnot consider the definition of tainted property could be read so broadly as to includeproperty funded entirely from legitimately sourced assets, even when the property wasnot depleted because the offender's living and other expenses were met from theproceeds of crime.13[33] In rebuttal, the Commissioner pointed to Winsor.14 In that decision CourtneyJ was satisfied that the proceeds of drug dealing had been used to pay the interest onthe mortgage over a property. She said the mortgagee was thereby kept at bay and thecapital gain realised on the property meant it was acquired in part as a result ofsignificant criminal activity. The Judge found that the property was tainted as a resultof the substantial funding of interest on the mortgage from drug dealing and evasionof tax.1511 Commissioner of Police v Drake [2017] NZHC 2919.12 At [110].13 At [110].14 Commissioner of Police v Winsor, above n 10.15 At [33].[34] The Commissioner also pointed to the Australian High Court decision inHart.16 That decision related to a claim by innocent third parties to assets which hadbeen forfeited following Mr Hart's conviction for operating tax minimisation schemes.The assets were various items of air craft which had been funded in part directly bythe proceeds of the unlawful activity. Those funds accounted for 29 per cent of thepurchase price.17 The burden of proof, on the balance of probabilities, was on theinnocent third parties to prove that the property was " not derived or realised,directly or indirectly, by any person from any unlawful activity".18 The High Courtwas concerned with whether or not the lower court had properly constructed theprovision. It considered the degree of causal connection between the relevant act andthe acquisition or continued holding by the person of the asset forfeited. In thatcontext, Gordon J said:19 derivation might in another factual setting be constituted by the act oromission resulting in the money or some other property being disposed of orotherwise dealt with so as to make a non-trivial contribution to the paymentfor the thing forfeited or a legal or equitable estate or interest in that thing,Those examples are not exhaustive. As with the use condition, thederivation condition does not lend itself to detailed exposition in the abstract.[35] Mr McKean for Mr Cheah says the regime in Australia is quite different fromhere and it is impossible to meaningfully compare them. I agree. Hart does not assistin the interpretation of the New Zealand provisions, nor is it authority for theproposition that assets which have no traceable connection with the unlawful benefitsfrom the criminal activity can be the subject of an assets forfeiture order. I agree withDunningham J's interpretation in Drake in that regard.20[36] It follows that I am not satisfied that the Westpac term deposit has beenindirectly derived from significant criminal activity in this case. The application foran asset forfeiture order in relation to that deposit fails.16 Commissioner of the Australian Federal Police v Hart [2018] HCA 1, (2018) 92 ALJR 154.17 At [158].18 At [6].19 At [16].20 Commissioner of Police v Drake, above n 11.Conclusion[37] The application for an asset forfeiture order in relation to the $70,520 in cashand the ASB term deposit is successful. The application for an asset forfeiture order inrelation to the Westpac term deposit fails.Profit forfeiture order[38] Profit forfeiture orders relate to unlawful benefits, rather than specific propertythat has been unlawfully gained. The Court will order the beneficiary of significantcriminal activity to pay the Commissioner the value of whatever unlawful benefit hasbeen derived, and any property owned or controlled by the beneficiary (unlesscontested in a relevant way) can be used to meet this order. Profit forfeiture orders aregoverned by s 55 of the Act. A profit forfeiture order must be granted if the Court issatisfied on the balance of probabilities that the respondent:21(a) has unlawfully benefited from significant criminal activity within the"relevant period of criminal activity";22 and(b) has interests in property.There is a four-step process in establishing whether a profit forfeiture order should bemade.23[39] As a first step under 55(2(a) of the Act, the Commissioner must prove on thebalance of probabilities that Mr Cheah has unlawfully benefitted from significantcriminal activity during the relevant period.24 If this is established, Mr Cheah canrebut the presumption that the value of the benefit is as stated in the Commissioner'sapplication on the balance of probabilities. The Court must then determine the actualvalue of the benefit.2521 Section 55(1).22 Section 5 definition of "relevant period of criminal activity": Seven years of the date of therestraining order (if any) or otherwise from application for profit forfeiture order.23 Pulman v Commissioner of Police HC Auckland CIV-2010-404-3773, 16 February 2010 at [10].24 Criminal Proceeds (Recovery) Act 2009, s 53(1).25 Section 53(2).[40] To have unlawfully benefitted, the person must have knowingly directly orindirectly derived a benefit from significant criminal activity. This is whether or notthat person undertook, or was involved in, that activity.26 The value of the benefit ispresumed to be the value stated in the application if the Commissioner proves, on thebalance of probabilities, that the respondent has, in the relevant period of criminalactivity, unlawfully benefited from significant criminal activity. The respondent canrebut that presumption on the balance of probabilities.27[41] As a second step under s 55(2)(b), the Court must determine the maximumamount recoverable by taking the value of the benefit from step 1 and deducting itfrom the value of any property already forfeited in relation to the same criminalactivity.28[42] The maximum recoverable amount is the value of the benefit, less the value ofany property forfeited to the Crown as a result of an assets forfeiture order made inrelation to the same significant criminal activity.29 This deals with double counting ifboth assets orders and profit orders are made.[43] As a third step, pursuant to s 55(3), the Court must determine whether anyproperty should be excluded due to hardship likely to be caused to Mr Cheah.30 Aswith assets forfeiture orders, the Court must determine whether any property shouldbe excluded from the order due to hardship likely to be caused to the respondent.31The Court will need to consider factors including what the property was used for,32 thenature and extent of the respondent's interest in the property,33 and the circumstancesof the relevant significant criminal activity.34[44] As a fourth and final step, the Commissioner must satisfy the Court on thebalance of probabilities that the requirements of s 53 have been met, and that the26 Criminal Proceeds (Recovery) Act 2009, s 7.27 Section 53(2).28 Section 54(1).29 Section 54.30 Section 56(1).31 Section 56(1).32 Section 56(2)(a).33 Section 56(2)(b).34 Section 56(2)(c).respondent has an interest in the property.35 If this is done, a profit forfeiture ordermust be made that specifies the value of the benefit,36 the maximum recoverableamount,37 and the property to be disposed of.38Significant criminal activity and unlawful benefit[45] In support of the application for profit forfeiture orders the Commissionerrelies for his unlawful benefit calculation on the same significant criminal activity asfor the asset forfeiture orders.[46] As I have noted it is common ground that Mr Cheah has benefited fromsignificant criminal activity. Apart from pleading guilty to the four charges ofsupplying of methamphetamine, he has admitted he was involved in supplying moremethamphetamine than is reflected by the criminal charges. I am entitled to take thatinto account.[47] "Unlawfully benefit" is defined under s 7 of the Act. Under this definition itis not necessary for the property to have been derived from the significant criminalactivity, or even that the beneficiary was involved in the significant criminal activity.39All that is required is that the beneficiary knew, which includes wilful blindness, thatthey were deriving a benefit from significant criminal activity.40[48] In Hayward, Venning J noted the range of evidence upon which theCommissioner can rely to prove unlawful benefit.41 Venning J noted that theCommissioner did not have to rely on the actual proceeds received from the offendingthe respondent was convicted of.42 The Court can infer (on the balance ofprobabilities) that Mr Cheah was involved in other significant criminal activities forwhich there was no criminal charge.43 This could be done by way of pointing to adisparity between legitimate income, assets and liquid assets where there is no35 Section 55(2)(c).36 Section 53.37 Section 54.38 Section 55(2)(c).39 Section 7.40 Section 7; Vincent v Commissioner of Police [2013] NZCA 412.41 Commissioner of Police v Hayward [2014] NZCA 625.42 At [22].43 At [22].legitimate credible explanation for this disparity.44 The Court of Appeal in Drylandadopted the standard of whether the only likely explanation for the unexplainedincome was unlawful activity.45[49] It is also possible for the Court to infer that the criminal activity occurred overa longer period than what is proven beyond a reasonable doubt in a criminal case – anexample of this was Haywood in which criminal offending occurring on only threedays in December 2009 but through the use of unexplained money entering and exitingMr Haywood's accounts, the Court inferred offending was occurring both before andafter that time.46[50] Further, it is possible for unlawful benefit to be proved using circumstantialevidence the sum of which on the balance of probabilities is sufficient but the items ofevidence separately are insufficient.47 The Commissioner need not prove separatelythat each individual strand of evidence meets the balance of probabilities test – onlythat the sum of the items does.48[51] If the Commissioner establishes on the balance of probabilities that Mr Cheahbenefitted from significant criminal activity then Mr Cheah bears the onus ofdisproving the Commissioner's claim of the level of the benefit as stated in theapplication.49 In Tang, Katz J confirmed the Commissioner does not have to prove theextent to which the respondent has benefited from the significant criminal activity – itis up to the respondent to rebut the presumption by providing evidence of what theyclaim the actual amount of benefit received was.50 This must be done on the balanceof probabilities.[52] The relevant period of criminal activity according to the Commissioner is 24August 2009 to 26 July 2016 (relevant period) and the amount claimed is $2,102,179.The Commissioner says there was unlawful benefit accruing far beyond the period44 At [22]; Commissioner of Police v Dryland [2013] NZCA 247 at [34] to [39].45 Commissioner of Police v Dryland, above n 44, at [34].46 Commissioner of Police v Hayward, above n 41, at [42].47 Commissioner of Police v de Wys [2016] NZCA 634.48 At [10].49 Criminal Proceeds (Recovery) Act 2009, s 53.50 Commissioner of Police v Tang [2013] NZHC 1750 at [33].established by the Judge in Mr Cheah's sentencing indication.51 The Commissionerproduced a schedule setting out his calculations as to the unlawful benefit from thedrug dealing. This provides:521 The unlawful benefit figure of $2,102,179 stated by the Commissioneris calculated as follows:(a) $132,000, being the value of the 293.88 grams ofmethamphetamine located at 2147 Great North Road;(b) $94,350, being the total value of Mr Cheah's earnings fromhis drug dealing activities in a 10 week period between Mayand July 2016, as recorded in the diary located at 2147 GreatNorth Road;(c) $1,843,856, being an estimate of the total value of Mr Cheah'searnings from the sale of methamphetamine (extrapolatedfrom the diary), during the 196 week period that he was notin receipt of any known income, excluding the time period at(b) above:(i) Mr Cheah recorded earnings of $99,450 in the diaryover a 74 day period;(ii) $99,450 divided by 74 provides Mr Cheah's averagedaily income of $1,343.91;(iii) Mr Cheah's weekly average income is calculated bymultiplying the daily rate of $1,343.91 is by seven,which equals $9,407.43(iv) To assess Mr Cheah's earnings from the sale ofmethamphetamine, the weekly rate of $9,407.43 ismultiplied by 196, (being the time period thatMr Cheah was not in receipt of income from hisemployer, and excluding the ten week periodrecorded in the diary) which equals $1,843,856.(d) $31,973, being the value of unknown deposits received intoMr Cheah's bank accounts:(i) $10,290 cash on 15 August 2011;(ii) $11,170 cash on 4 January 2012; and(iii) $10,458 unidentified deposits to ASB accounts and55$ to the Westpac accounts.2 $132,000 + $94,350 + $1,843,856 + $31,973 = $2,102,179.51 R v Cheah DC Waitakere CRI-2016-090-004211, 19 December 2016.52 This is the unlawful benefit calculation provided at the hearing (footnotes omitted). Theapplication states the maximum recoverable amount to be $2,178,103.00.[53] The Commissioner argues that it is open to the Court to infer on the evidencethat Mr Cheah's offending was greater than the criminal proceedings established.53[54] The Judge noted that Mr Cheah had 293.88 g of meth at his home whenarrested, which at a total of $600 - $1000 a gram comes to a sum of $191,022 to$293,880. There was also $70,520 in cash at his home. The Commissioner's case isthat this was the tip of the iceberg.The Comissioner's submissions[55] Mr Cheah kept records in a diary in the ten-week period in which he wasdealing drugs preceding his arrest. It recorded the totals of money Mr Cheah receivedfrom his meth sales between 16 May 2016 and 29 July 2016. Sales are recorded almostevery day. The total value of Mr Cheah's drug sales over the period was $99,450.[56] Mr Cheah accepts that he purchased half gram amounts of meth in 2015 tosupply Mr Wagner. This points to his drug offending occurring over a longer period oftime than was recorded in his diary in 2016.[57] Mr Cheah now admits using meth personally starting in 2012. When he wasarrested on 29 July 2016 he had said he started in 2010. Mr Cheah accepts he startedselling meth to cover the cost of his personal use from 2015 onward. He also admittedbuying half or quarter gram quantities for his personal use when he began. Thesewould cost $200 to $300. He was unemployed for a significant period of the time thathe was dependent on methamphetamine.[58] From 2002 to mid-way through 2012, Mr Cheah had been a top performingsales person at a duty-free outlet. He was employed by L'Oréal, a cosmetic company,on an hourly rate which had been increased to $25, from a starting rate of $11 per hour.In addition, he was given various incentive payments by both L'Oréal and other luxurycosmetic and perfume suppliers. These were based on the number of sales he made ofvarious products. The Commissioner produced records from L'Oreal which gaveexamples of incentive products that Mr Cheah may have received during his53 R v Cheah, above n 51.employment in order to show the items that Mr Cheah received were likely of lowvalue. An email exchange with L'Oreal was also tendered. This said that employeescould receive large sale incentives up to a maximum return value of $5000 per year.Mr Cheah challenged the admissibility of this evidence on the basis that it was hearsay.[59] The requisite 20 days' notice was not given objecting to the evidence ofMr Taylor which attached the L'Oréal records.54 The Commissioner says he wasprejudiced by that failure as he could have called evidence on the issue.[60] Mr McKean pragmatically accepted that the real issue is the weight that I puton them rather than their admissablity. I agree. The records are not complete, nor dothey purport to cover all the cosmetics and perfume items that Mr Cheah says hereceived.[61] I am of the view that they are admissible however not of great weight. Therecords are of limited assistance. They are largely extracts from the company'sbusiness records. It is unlikely that the person supplying them, who is based inAustralia, would recollect making them. Undue delay and expense would be causedby requiring the relevant person to be called as a witness.55[62] Having dealt with that matter, I turn back to Mr Cheah's employment. In 2012,his performance at work was deteriorating due to his methamphetamine habit. L'Oréalformally terminated his employment in June 2012.56[63] The Inland Revenue Department records show that Mr Cheah's declaredearnings were $53,683 in the tax year ending 2011, $29,213 in the tax year ending2012 and $6,635 in the tax year ending 2013. This totals $89,531 for the period of the2011 to 2017 tax years (inclusive). After PAYE deductions of $18,480, his total netincome was $71,051. He did not declare any income to the Inland Revenue Departmentbetween August 2012 and the time of his arrest in July 2016.54 High Court Rules 2016, r 9.11.55 Evidence Act 2006, s 19(1).56 There is some evidence suggesting the termination was completed in early 2013. However, thedate is immaterial.[64] The only other legitimate income Mr Cheah had was the interest on his bankaccounts. This was in the vicinity of $10,000 in 2011. He also received $2,500 hesays was returns on investment from Malaysia in each December 2013, June 2014,December 2014 and June 2015.[65] The Commissioner pointed to New Zealand Statistics 2013 householdeconomic survey which found the average weekly expenditure of a one-personhousehold was $564 weekly, and would have totalled $205,296 over the relevantperiod. Mr Cheah withdrew a total of $155,641 from his bank accounts over that sameperiod which would be insufficient to meet the estimate of Mr Cheah's living costs.This estimate does not take into account Mr Cheah's meth addiction nor his yearlytrips to Malaysia. Mr Cheah claims he funded all of these expenses with withdrawalsfrom his bank accounts and sale of products.[66] In addition an analysis carried out by the Commissioner on the ASB bankaccounts for the period 2 August 2009 to 26 July 2016, indicates that Mr Cheah madeno payments through that account for power and repairs and maintenance. TheCommissioner says Mr Cheah must have been living a cash based life.Mr Cheah's rebuttal[67] If it is accepted on the balance of probabilities that Mr Cheah benefited fromsignificant criminal activity, then the figure of $2,102,179 is presumed to be correctunless he is able to rebut that presumption. A simple critique of the Commissioner'scalculation methods is insufficient; Mr Cheah must give his own evidence to establishon the balance of probabilities that the true benefit was less than $2,102,179.57[68] Mr Cheah's rebuttal amounts to the following. Mr Cheah said in his affidavitthat the total income from his drug dealing was $100,000 (the value of themethamphetamine found) together with the cash. Therefore the total is $170,000. Hesaid that is what he received from drug dealing over a one year period. He claims thefigure produced by the Commissioner of $1,843,856 as an estimated value of MrCheah's profit from the sale of methamphetamine is far too high. This number was57 Commissioner of Police v Tang, above n 50.calculated using the monetary amounts recorded in Mr Cheah's diary from a 74-dayperiod extrapolated out over the 196 weeks Mr Cheah was not receiving income. MrCheah argues the diary was kept at the height of his methamphetamine dealing and toextrapolate this over a long period is inaccurate.[69] Mr Cheah says his methamphetamine sales did not begin until 2015, and thatthere is no evidence to show otherwise. He had admitted using methamphetaminebefore that, and was able to sustain both his own supply of methamphetamine andliving expenses largely out of his bank accounts and the sales of the luxury perfumeand cosmetic products he had stock piled from his previous employment. Mr Cheahclaims that as was typical he progressed to dealing over time.[70] Mr Cheah was also the owner of a half share and the occupier of the propertyat Great North Road. He agreed he paid some expenses in cash. He also confirmedhe ran a car. He claims he was able to live on $10,000 per annum, and funded hislifestyle with the $155,641 that he withdrew from his bank accounts for the periodafter his employment had ended. He travelled to Malaysia, but said these trips to seehis parents were few and he travelled using on a cheap airline.[71] I am of the view that the withdrawals from his bank accounts would have beenused for living expenses even if he had been living frugally. The funds for hispurchases of methamphetamine must have come from other sources. He claims hepaid for the methamphetamine with cash that was largely derived from the sale ofproducts he had received either as large sale incentives or allocations from L'Oréaland other cosmetic and perfume companies. He also said he made money from timeto time by doing some hairdressing. None of this income was disclosed to the InlandRevenue Department.[72] Mr Cheah said he knew that the incentive items were gifts and something togive to friends rather than for sale but nevertheless he did sell them. He said that hehad sold 70 per cent or more of his stockpile when arrested. His market was Asiancustomers, other staff at the duty-free store and customers on the internet. Heproduced nothing to support these contentions.[73] Mr McKean submitted that Mr Cheah should be believed as he had candidlyadmitted, under cross-examination, a number of matters which were put to him whichwere not in his interest. This included the fact that the unexplained deposits into hisASB wage account were not from sales of perfume and luxury goods. He had earliersaid that they were from product sales.[74] In my view Mr Cheah was not slow to lie about matters when they did not suithis interests. He lied about his involvement in the drug dealing when he was initiallyarrested. He said he did that because he was so shocked at being arrested. At thatstage, he blamed all the dealing on his associate. He now accepted he was guilty ofsupplying, albeit he said he was only supplying his associate Mr Wagner. Hemaintained he had weaned himself off methamphetamine after he became unemployedbut had been lured back by Mr Wagner sometime in 2014 and started selling in 2015.I find it is unlikely he stopped using methamphetamine when he left his employment.He was clearly in a bad state in the period leading to his dismissal and it is unlikely hechanged his behaviour. He failed to mention that he stopped using methamphetamineto the probation officer but instead had gone into some detail about his reliance onmethamphetamine and the mental health issues that flowed from that. Further MrCheah also initially said that only part of the $70,520 cash found in his wardrobe wasfrom his drug supplying activities. He said some was from product sales. However,he agreed at the hearing the cash was from drug sales.[75] I am of the view that while he did concede a number of matters in the witnessbox, he was not generally a credible witness.Conclusion[76] I am satisfied on the balance of probabilities that Mr Cheah has unlawfullybenefited from significant criminal activity within the relevant period. That relevantperiod is the seven years prior to the date of the application, meaning between 24August 2009 and 26 July 2016 in this case.58 I am satisfied the benefit extended58 Commissioner of Police v Tang, above n 50, at [39].58 Criminal Proceeds (Recovery) Act 2009, s 5.beyond the profits from the dealings supporting his convictions and beyond the periodrecorded in Mr Cheah's diary which was found on the premises on 29 July 2016.[77] Mr Cheah may have been frugal, but nevertheless he had a car to run as wellas household expenses and maintenance. With his additional expenses, such asoverseas travel (which is not taken into account in the household economic survey), Iam of the view that it is more likely than not that his living expenses would have beencloser to the Commissioner's estimate based on the household economic survey, thanMr Cheah's estimate of $10,000 per annum.[78] I do not accept that Mr Cheah received substantial funding from the resale ofproducts. I do not consider that the sale of the items would have been sufficient togenerate the amount of money that was required for him to purchase his own drugsand to fund his drug dealing business. There are a number of reasons for this, includingthe fact that the amount of product he would need to sell would be considerable. I alsonote his employment records, particularly over the last two years of his employment,show that his earnings were decreasing. His ability to earn large sale incentives andallocations was likely decreasing as well. I do not accept that he had a substantial cashbusiness in selling cosmetics and luxury goods he had stockpiled.[79] The disparity between Mr Cheah's legitimate income and his maintenance ofmoney in his bank accounts on the one hand and his living expenses (in particular thecost of purchasing methamphetamine for his own drug habit) on the other supports myview that the benefit Mr Cheah received from his criminal activities was significant.He was very experienced in supplying methamphetamine by the time of his arrest.The Judge noted in her sentencing indication decision in relating to Mr Cheah'scharges of supply of methamphetamine and possession of methamphetamine for thepurposes of supply that the police had found over 293.88 grams of methamphetamine(almost 11 ounces). That is a substantial amount. The judge said that considering thencurrent values of between $600 and $1000 per gram, the amount involved may havebeen worth between $191,022 and $293,880.5959 R v Cheah, above n 51, at [5].[80] Mr Cheah had graduated from buying and selling small amounts of drugs, tobuying substantial amounts, repackaging it and selling it at a large profit margin. I amnot required to undertake a profit and loss calculation. I must approach my assessmentholistically. It would be impossible for a court to accurately calculate the net profit ofa drug dealing operation such as Mr Cheah's. The Court does not need to undertakethat analysis nor calculate the gross or net benefit accruing from the criminal activity.[81] Mr Cheah submitted the cost of the purchase of the meth found should bededucted from the calculation as to its value. However I am not required to deduct thecosts of Mr Cheah's drug supply business even if there is a possibility of over recoveryinvolved.60 As Lang J commented in Pullman,61 equating benefit with profit wouldlead to significant practical difficulties and would require the Court to engage in acomplex accounting exercise in order to determine the ultimate benefit the respondentretained from his criminal activity.[82] The value of the benefit is determined in accordance with s 53 of the Act. TheCommissioner enjoys a presumption under s 53 that the value of the unlawful benefitis the figure stated in the Commissioner's application. The Commissioner hasnominated the figure of $2,107,583.62 However, the unlawful benefit calculationwhich was handed up at the outset of the hearing sets out a figure of $2,102,179. Theapplication dated 25 July 2017 states the benefit determined in accordance with s 53of the Act is $2,178,103. The Act requires the benefit to be the value stated in theapplication or amended application.[83] As the lowest of the various figures put forward by the Commissioner is$2,102,179 I am of the view that Mr Cheah should be given the benefit of the lowestfigure put forward and I treat that figure as the application figure.[84] It is for Mr Cheah to rebut the statutory presumption by providing evidence asto what he says his actual amount of the benefit is.63 Mr Cheah deposed in his affidavitthat the total value of his drug dealing was $100,000 worth of methamphetamine60 Solicitor General v Rhodes HC Auckland CIV-2007-404-3373, 16 February 2010 at [41].61 Pullman v Commissioner of Police HC Auckland CIV-2010-404-5666, 27 May 2011.62 This is the amount set out in the submissions of the Commissioner at paragraph 6.9.63 Commissioner of Police v Tang [2013] NZHC 1750 at [54].together with the cash totalling $170,000. He said that is what he received from drugdealing over a one year period. That is implausible for the reasons set out above. Ihave found against Mr Cheah in relation to his explanations about how he managedto, in particular, fund his own drug use for some years.[85] Therefore, the presumption in favour of the Commissioner that the value ofunlawful benefit is the figure is as he has stated has not been rebutted.[86] Accordingly, the value of the benefit from significant criminal activity ispresumed to be $2,102,179.Calculation of maximum recoverable amount[87] I am now required by s 54(1)(b) of the Act to deduct from the value of thebenefit derived from calculating the profit forfeiture order, the value of any propertyforfeited as a result of the asset's forfeiture orders made in relation to the samesignificant criminal activity.[88] This means the maximum recoverable amount under a profit forfeiture order iscalculated in the following way:1 Sum specified by the Commissioner pursuant to s 52 of the Act: $2,102,179.002 Value specified for assets covered by assets forfeiture orders being:Cash: $70,520.00ASB term deposit: $50,000.14Maximum recoverable profit under profit forfeiture order: $1,981,658.86Undue hardship[89] Pursuant to s 55(3), the Court must determine whether any property should beexcluded from the profit forfeiture orderdue to hardship likely to be caused to MrCheah.64 The Court will need to consider factors including:(a) What the property was used for;6564 Criminal Proceeds (Recovery) Act 2009, s 56(1).65 Section 56(2)(a).(b) The nature and extent of Mr Cheah's interest in the property;66(c) The circumstances of the relevant significant criminal activity.67[90] Mr McKean for Mr Cheah submitted that an assessment as to whether there isundue hardship present is fact specific. Every case is different. He submitted thatMr Cheah's house should be excluded from the forfeiture as otherwise this wouldmean the loss of his home, purchased well before he became involved in the supply ofdrugs. Mr McKean pointed to Mr Cheah's previous clean criminal record and that hehad not lived the high life nor had he amassed substantial assets.[91] Mr McKean noted that when Mr Cheah gets out of jail he will be a mature manand will need to start again. While it was conceded that when he was released hemight be eligible for a benefit, Mr McKean submitted that was a harsh submission inthe circumstances. Mr Cheah is suffering from mental illness apparently brought onby the methamphetamine use.[92] Mr McKean further submits that there is no burden of proof that Mr Cheahmust meet in this regard.68 Rather he needs simply to place before the Court theevidence of hardship on which the Court can reach a judicial view.[93] The threshold for relief for a person in Mr Cheah's position is high. He mustshow not merely inconvenience or difficulty but that any hardship he will suffer willbe disproportionate to the gravity of his offending.69[94] In Lyall v Solicitor-General the Court of Appeal held that undue hardshipshould be assessed in light of the legislative policy that wrong doers should be strippedof proceeds of crime. Therefore, any disproportion between a respondent's offendingand the value of the property sought to be forfeited must be gross or severe beforerelief can be justified.7066 Section 56(2)(b).67 Section 56(2)(c).68 Commissioner of Police v Nelson HC Auckland CIV-2010-404-989, 30 July 2010 at [20].69 At [73] - [75]; Commissioner of Police v Duncan HC Tauranga CIV-2010-470-933, 11 October2011 at [144].70 Lyall v Solicitor-General [1997] 2 NZLR 641 (CA).[95] Collins J in Ranga took the approach of assessing whether any proposedforfeiture, when weighed with the punishment that has been imposed, is sufficientlyconnected and proportionate bearing in mind the aims of the Act of ensuring offendersdo not benefit from unlawful activity and deterring others from engaging in suchactivities.71[96] In my assessment, the hardship Mr Cheah will suffer is not disproportionate tothe extent and seriousness of his offending. While he might lose ownership of hishouse, he is not disabled to the extent of being unable to work. He may be eligible fora state benefit and he has funds which he has lent to his father from advances made inthe vicinity of $40,000 which are outside this jurisdiction. It is unclear what the returnsare on this money but there is at least part remains outstanding. Mr Cheah knowinglyparticipated in the supply of controlled drugs. He had a significant drug businessoperating at the time he was arrested. While the home was derived from legitimatesources that in itself does not constitute undue hardship.[97] Accordingly, I conclude that Mr Cheah has not established undue hardship.Conclusion[98] In light of these findings, I now turn to the orders that should be made.[99] The Commissioner's application for asset forfeiture orders is successful inrespect of the following property:(a) $70,520 in cash seized by the police on arrest from the Great NorthRoad property on 29 July 2016 and all interest earned thereon, and(b) The former contents of ASB Bank Limited term deposit account 12-3045-0477842-075 held in the name of Mr Cheah, containing$50,000.14 currently in the custody of the Official Assignee and allinterest earned thereon.71 R v Ranga [2013] NZHC 745 at [43].[100] Turning to the Commissioner's application for a profit forfeiture order, I amsatisfied that the value of the benefit was $2,102,179.00, and in light of the assetforfeiture orders made above, the maximum recoverable amount is $1,981,658.86.The property to be made subject to the profit forfeiture order is:(a) Mr Cheah's half share interest in the property at 2147 Great NorthRoad, Avondale, Auckland, owned by Mr Cheah and William PierceSomerville (as tenants in common), described in certificate of titleNA125B/646; and(b) the former contents of Westpac New Zealand Ltd term deposit account03-0109-0133085-081 held in the name of Mr Cheah, containing$298,078.08 currently in the custody of the Official Assignee and allinterest earned thereon.[101] I make an order accordingly.[102] Leave is given to the parties to file memoranda in relation to any issues thatarise as a result of my judgment.Costs[103] It appears to me that there is no reason why the Commissioner is not be entitledto costs as the successful party. However, if costs cannot be agreed, leave is given tothe parties to file submissions in relation to this issue. Memorandum should be filedon or before 20 working days from the date of this judgment.______________________________Grice JSolicitors:Meredith Connell, Auckland for ApplicantWebb Ross McNab Kilpatrick Ltd, Whangarei for Respondent