DRAKE v COMMISSIONER OF THE NEW ZEALAND POLICE [2020] NZCA 494

DRAKE v COMMISSIONER OF THE NEW ZEALAND POLICE [2020] NZCA 494 [15 October 2020]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA1/2018[2020] NZCA 494BETWEEN LETICIA MARGARET DRAKEFirst AppellantGAVIN JOHN STEWARTSecond AppellantAND COMMISSIONER OF THENEW ZEALAND POLICERespondentHearing: 19 August 2020Court: French, Brown and Clifford JJCounsel: M Starling and N R Wham for AppellantsK South and C C White for RespondentJudgment: 15 October 2020 at 11 amJUDGMENT OF THE COURTA The appellants' application for leave to amend the grounds of appeal so as toinclude a ground regarding the validity of the notices issued under s 11 ofthe Social Security Act 1964 is granted.B The respondent's application for leave to adduce the further evidence ofDarran Thomas Toner is granted.C The appeal is dismissed and the orders made in the High Court areconfirmed.____________________________________________________________________REASONS OF THE COURT(Given by French J)Introduction[1] Ms Drake and Mr Stewart own property which the High Court has ordered isto be forfeited under s 50 of the Criminal Proceeds (Recovery) Act 2009.[2] They now appeal that decision which was made by Dunningham J.1[3] The appeal was heard by the same panel and on the same day as another appeal(Wheki v Ministry of Social Development2) because of a common issue regarding theadmissibility of evidence obtained under s 11 of the now repealed Social Security Act1964. However, that issue is just one of several grounds of appeal advanced byMs Drake and Mr Stewart and accordingly a separate judgment is appropriate.[4] We begin our discussion with a brief explanation of the relevant aspects ofthe forfeiture regime before turning to the background of this case.The legislative framework[5] The purpose of the Criminal Proceeds (Recovery) Act is to establish a regimefor the restraint and forfeiture of property that has either been derived directly orindirectly from significant criminal activity or represents the value of a person'sunlawfully derived income.[6] Section 3(2) sets out the objectives of the regime. They include:(a) to eliminate the chance for persons to profit from undertaking or beingassociated with significant criminal activity;(b) deter significant criminal activity;1 Commissioner of Police v Drake [2017] NZHC 2919 [High Court decision].2 Wheki v Ministry of Social Development [2020] NZCA 493.(c) reduce the ability of criminals and persons associated with crime orsignificant criminal activity to continue or expand criminal enterprise;[7] Under the Act, property can be restrained or forfeited without the need fora conviction in relation to the alleged criminal activity.3[8] There are relevantly two types of forfeiture orders: asset forfeiture orders andprofit forfeiture orders. Section 50 requires the High Court to make an asset forfeitureorder if satisfied on the balance of probabilities that the items of property in questionare "tainted" property. "Tainted property" is defined to include property that haswholly or in part been acquired as a result of significant criminal activity or directlyor indirectly derived from significant criminal activity.4[9] As to what constitutes "significant criminal activity", that term is defined tomean either offending that if prosecuted would consist of or include one or moreoffences punishable by a maximum term of imprisonment of five or more years oran offence from which benefits of a value of $30,000 or more have been acquired orderived.5[10] Profit forfeiture orders are governed by s 55. The Court must make suchan order if satisfied on the balance of probabilities that a person has unlawfullybenefited from significant criminal activity during the seven years immediately priorto the filing of the application and has interests in property.6[11] Section 54 provides that the maximum recoverable amount under a profitforfeiture order is the value of the unlawful benefit less the value of any propertyforfeited to the Crown as a result of an assets forfeiture order made in relation tothe same criminal activity. As noted by Dunningham J, this means if an asset forfeitureorder is made, the terms of any profit forfeiture order must be adjusted to reflect that.73 Criminal Proceeds (Recovery) Act 2009, s 4(1)(a).4 Section 5.5 Section 6.6 Sections 5 (definition of "relevant period of criminal activity") and 55.7 High Court judgment, above n 1, at [16].[12] In relation to both asset and profit forfeiture orders, the Court has a residualdiscretion to grant relief from forfeiture if satisfied that undue hardship is likely to becaused.8Background[13] In 1999, Ms Drake was convicted of benefit fraud and sentenced to six monthsperiodic detention and 12 months supervision. She had claimed a domestic purposesbenefit from October 1997 to December 1999 while living in a de facto relationshipwith Mr Stewart. There was one count of misleading a social welfare officer andfour counts of dishonestly using a document for pecuniary advantage.[14] Early in 2000, Ms Drake again applied for a domestic purposes benefit sayingthat she had separated from Mr Stewart on 23 January 2000. In 2002 the Ministry ofSocial Development (MSD) sent her a letter warning her against taking paidemployment without declaring her income.[15] On three separate occasions, in September 2003, May 2008 and April 2009,Ms Drake was interviewed by MSD fraud officers acting under an "early intervention"programme in force at the time. Clients were interviewed about their situations to helpdetermine on-going full and correct entitlement to benefit. Obligations to MSD werealso discussed. On each occasion, Ms Drake told the interviewers she was entitled tothe benefit at a single rate.[16] In 2014, following receipt of an anonymous complaint,9 MSD launched a fraudinvestigation into Ms Drake's affairs. The investigation revealed that for some15 years she had obtained MSD benefits notwithstanding that she was both inemployment and in a relationship in the nature of marriage with Mr Stewart.Both were matters she was obliged to disclose to MSD and which would have affectedher entitlement to the benefits. As a result of fraudulently obtained MSD benefits,Ms Drake also obtained Working for Families tax credits which were calculated byMSD based on her benefit payments.8 Criminal Proceeds (Recovery) Act, ss 51 and 56.9 The complaint was received in 2013.[17] Ms Drake was prosecuted and pleaded guilty to 15 charges of using a documentor obtaining by deception. At sentencing, Judge Neave said the total amount involvedwas in excess of $185,000.10 He sentenced her to a term of imprisonment of two yearsand nine months.[18] In 2016, the Commissioner of Police (the Commissioner) filed an applicationfor asset and profit forfeiture orders under the Criminal Proceeds (Recovery) Actagainst property in which Ms Drake and Mr Stewart had interests.[19] The asset forfeiture orders were sought against (a) a jointly owned residentialproperty at 142 Emmett Road valued at $358,000 with an equity of $229,597.25(b) earthquake insurance pay outs of $23,093.70 relating to that property and(c) $58,696.18 in funds held in the custody of the Official Assignee derived fromtwo ANZ bank accounts in the name of Mr Stewart. Of the two bank accounts, onehad the suffix 46 and the other suffix 30.[20] The house property and funds held in the two ANZ bank accounts had beenthe subject of a without notice restraining order granted by Dunningham J inMay 2015. The restraining order had been granted on the grounds the Judge hadreason to believe Ms Drake and Mr Stewart had unlawfully benefited from significantcriminal activity and that the property was tainted by that activity.[21] The significant criminal activity alleged against Mr Stewart was tax evasion inthat he allegedly failed to pay income tax on all of his earnings as an electrician forthe years 2010 to 2016. He was never charged.[22] The profit forfeiture order sought was for an order in the sum of $158,635.03being the unlawful benefit Ms Drake and Ms Stewart were alleged to have receivedfrom their own and each other's criminal activity. The relevant period of criminalactivity relied on for this purpose was the period 13 May 2008 to 31 March 2016.The commencement date of 13 May 2008 was selected because that was exactlyseven years prior to the filing of the application for a restraining order which hadoccurred on 12 May 2015.10 R v Drake [2016] NZDC 7545.[23] The unlawful benefit received by Ms Drake and Mr Stewart during this periodwas claimed to arise from three types of offending:(a) MSD benefit fraud 13 May 2008 to 5 April 2015 — $91,256.33.(b) Family Tax credit fraud 13 May 2008 to 31 March 2015 — $45,269.98.(c) Tax evasion 1 April 2010 to 31 March 2016 — $22,108.72.[24] Ms Drake and Mr Stewart opposed the application for asset and profitforfeiture orders on a number of grounds.[25] Mr Stewart denied the allegations of tax evasion and denied any knowledge ofMs Drake's offending. He also denied benefiting from her offending whether directlyor indirectly. Both denied that the property identified for asset forfeiture orders wastainted and also argued that in calculating the amount of the unlawful benefit for thepurpose of a profit forfeiture order, the Commissioner should have taken into accounttheir notional entitlement to other MSD benefits and tax credits. It was also contendedthat making the orders would result in undue hardship to them and their children.[26] Ms Drake and Mr Stewart also raised issues regarding the admissibility ofcertain evidence including evidence of incriminating statements made by them toMSD's investigator which it was contended had been obtained in breach of s 23 of theNew Zealand Bill of Rights Act 1990.[27] In a detailed and closely reasoned judgment, Dunningham J rejected all ofthese arguments and granted the application for an asset forfeiture order in relation tothe house, the earthquake insurance payments and one of the ANZ bank accounts(suffix 30). The Judge did not however grant the application for a profit forfeitureorder because she was satisfied the value of the assets forfeited to the Crown exceededthe value of the unlawful benefit received by Ms Drake and Mr Stewart.1111 High Court judgment, above n 1, at [163]–[165].[28] Dissatisfied with the making of an asset forfeiture order, Ms Drake andMr Stewart filed an appeal in this Court.Grounds of appeal[29] The appellants advance several grounds of appeal involving challenges to bothfindings of fact and law. In particular, they contend the Judge erred in making thefollowing findings:(a) Mr Stewart knowingly committed tax evasion offences.(b) Both knew of the other's offending.(c) The entire balance of ANZ bank account suffix 30 was tainted andpayments from it could taint other property.(d) The onus of proof for calculations of notional entitlement fell on theappellants.[30] The notice of appeal was filed in 2018.[31] In 2019, the Privacy Commissioner issued a report finding that MSD hadbreached the Privacy Act 1993 and the Social Security Act 1964 by adopting a blanketpolicy to seek information from third parties about beneficiaries under investigationwithout first seeking the information from the beneficiaries themselves.12When counsel became aware of the report and obtained Ms Drake's MSD file, theysought leave to add a further ground of appeal, namely that some of the evidencegathered by the investigator in Ms Drake's case had been obtained in breach of boththese Acts and was therefore inadmissible in these proceedings.[32] In response, the Commissioner applied for leave to adduce evidence on appealfrom the investigator in question, Darran Toner. That application was opposed.12 John Edwards Inquiry into the Ministry of Social Development's Exercise of Section 11 (SocialSecurity Act 1964) and Compliance with the Code of Conduct (Privacy Commissioner, 16 May2019) at 24.Mr Toner provided an affidavit and was required to attend the hearing to becross-examined.[33] For obvious reasons, it is unsatisfactory for an issue to be raised for the firsttime in this Court especially in circumstances when no evidence was called about it inthe trial court and there is no finding by the trial Judge. However, given it was raisedbecause of a subsequent report, we are prepared to grant leave to amend the groundsof appeal. We would not however have done so without the benefit of some evidenceto fill the evidential void. That evidence has come from Mr Toner.13 The applicationfor leave to adduce his evidence is therefore also granted. It should not have beenopposed.[34] Finally, we record two other matters for completeness. The first is thatthe appellants elected not to pursue grounds of appeal relating to the Judge's findingof a relationship in the nature of marriage and the admissibility of the admissions madeto Mr Toner.[35] The second is the issue of whether the Judge was correct to find Ms Drake hadan interest in bank accounts in the sole name of Mr Stewart. The Judge's finding ofan interest was based on Ms Drake's right to make a property relationship claim inrespect of the accounts. Although the issue was identified as a stand-alone ground ofappeal, Ms Wham, for the appellants, conceded in the course of oral argument that theright to make a property relationship claim did amount to an interest. We consider thatwas an appropriate concession to make. In our view, the Judge's finding wasunassailable and supported by well-established authority.14AnalysisWas the evidence obtained by MSD from third parties unlawfully obtained?[36] Although the current proceedings are civil proceedings, we accept there isjurisdiction to exclude improperly obtained evidence in appropriate cases.1513 The appellants had indicated they would provide affidavit evidence but did not do so.14 Duncan v Commissioner of Police [2013] NZCA 477, (2013) 26 CRNZ 796 at [20]; and Doormanv Commissioner of Police [2013] NZCA 476, [2014] 2 NZLR 173 at [36].15 Marwood v Commissioner of Police [2016] NZSC 139, [2017] 1 NZLR 260.[37] Section 11 of the Social Security Act empowers MSD to serve notices requiringany person to provide such information and documents that MSD seeks for the purposeof determining whether a person in receipt of a benefit is entitled to receive it.[38] When exercising this information gathering power, MSD was at the relevanttime required to comply with a Code of Conduct which had been issued in 2012(the Code).16 It was common ground that if MSD fails to comply with the Code, anynotice it purports to issue under s 11 is unlawful.[39] Clause 3.1 of the Code states:3.1 When seeking information or documents about a beneficiary and/orany other person, the officer must, –a) first request the information or documents fromthe beneficiary and/or that other person, andb) give the beneficiary and/or that other person a reasonable timeto provide the information or documents and informthe beneficiary and/or that other person of that time –except where the officer has reasonable grounds to believe thatcompliance would prejudice the maintenance of the law.[40] As to what is meant by "prejudice the maintenance of law", the Code definesthis as including:an action that would, or would be likely, to prejudice the prevention, detection,investigation, prosecution, or punishment of an offence; or the imposition ofa pecuniary penalty.[41] Appendix A of the Code also states:The definition of the term "prejudice the maintenance of the law includessituations where the Ministry believes that asking the individual for theirinformation before going to a third party would prejudice our investigation.This can be on the basis of the delay it would cause, the risk of alterations todocuments, or the risk of colluding with other parties.[42] In his report, the Privacy Commissioner noted that the requirement to first seekinformation from the beneficiary provides some measure of privacy protection as well16 Code of Conduct for Obtaining Information under Section 11 Social Security Act 1964 (Ministryof Social Development, 12 September 2012).as ensuring that individuals are kept informed about the nature of inquiries being madeabout them.17[43] In this case, after the anonymous allegation against Ms Drake was received,her file was allocated by a computerised system to what MSD called a "High WorkQueue". It was then reviewed by a manager to ensure it was in the right work streambefore being assigned to Mr Toner to investigate.[44] In the course of his investigation, Mr Toner issued 40 notices under s 11 tovarious third parties requiring them to provide information regarding the appellantsand their children without first requesting it from Ms Drake. According to counsel'ssubmissions, the information sought by way of s 11 notices included banking records,hospital admission forms, family violence history, the family's sleeping arrangementsat motels and call and text message data.[45] At the time, Mr Toner made a file note recording that he was making theserequests direct to source to avoid prejudice to the maintenance of law.[46] Subsequently a decision was made on the basis of the information gatheredthat a search warrant of the appellants' jointly owned property was justified.The search warrant was executed on 13 April 2015 and personal items removed.According to Mr Toner, the information obtained as a result of the search indicatedthat Ms Drake had been dishonest about her relationship status.[47] On appeal, Mr Starling on behalf of the appellants submitted that in breach ofthe Code, Mr Toner invoked the "prejudice the maintenance of law" exception withoutany reasonable grounds to do so. In particular, there was no evidence before him thatMs Drake had previously failed to respond to requests for information. It was alsoargued that the breach of the Code and the Privacy Act was further exacerbated by thescope and number of the requests as well as the intrusive and unreasonable search ofthe family home that subsequently took place in breach of the New Zealand Bill ofRights Act.17 John Edwards, above n 12, at 4.[48] We agree it would not have been sufficient for Mr Toner to rely simply onthe fact the case had been allocated to the high risk work queue. To comply withthe Code, he had to undertake an individualised assessment and himself formthe necessary belief on reasonable grounds.18[49] However, the evidence shows those requirements were clearly satisfied.Mr Toner made file notes recording the matters he took into consideration. One ofthe most important was Ms Drake's past history of dishonesty. It can be no answer tosay that this was a history of fraud and not a history of tampering with evidence orfailing to respond to requests for information made under s 11 and therefore nota reason to consider that going to her first would likely prejudice the maintenance oflaw. That argument overlooks the nature of her past dishonesty. It consisted ofwithholding information she was obliged to give MSD as well as providing falseinformation. It would have been reasonable to reach the view that in light ofthis propensity, she was unlikely to be a reliable source of information, would likelyprevaricate and provide incomplete evidence or tamper with it.[50] As regards the scope of the requests, we acknowledge they were wide-ranging.However, that reflected the period of time involved and the way Ms Drake andMr Stewart had arranged their affairs and was in all the circumstances reasonable.[51] We conclude that the information obtained from third parties under s 11 wasnot obtained improperly and was admissible in this proceeding. This ground of appealis therefore dismissed.Did the Judge err in finding Mr Stewart had engaged in tax evasion?[52] The maximum penalty for tax evasion is a term of imprisonment of five years,which means that it qualifies as significant criminal activity for the purposes ofthe civil forfeiture regime.1918 See the discussion in Wheki v Ministry of Social Development, above n 2, at [59]–[73].19 Tax Administration Act 1994, s 143B(4). An offender could also be liable to a fine not exceeding$50,000, or both a fine and a maximum term of imprisonment of five years, but it is the maximumterm of imprisonment that is relevant to whether the activity is "significant criminal activity"within the meaning set out in the Criminal Proceedings (Recovery) Act, s 6.[53] Mr Stewart did not file any tax returns for the years 2010 to 2016 untilprompted to do so as a result of the investigation. According to the tax returns he dideventually file in 2016, he had earned nothing in the financial years ending 2011 and2012 and for the years 2013 to 2016 he had earned only $36,185.24. He was assessedfor and paid income tax in the amount of $3,931.28 on those earnings.[54] The Commissioner however contended that Mr Stewart had workedthroughout the relevant period as a self-employed electrician earning an estimatedannual income of $30,000 and that the tax returns deliberately understated his income.On an annual income of $30,000, he would have been liable to pay income taxamounting in total to $26,040. The unlawful benefit obtained was thus $22,108.72being the difference between the tax it was alleged he should have paid and the tax hedid pay.[55] Mr Stewart disputed this. He said the tax returns were accurate. He gaveevidence that after being made redundant in 2010 he had no paid employment at allfor two years until he commenced doing some part time work for a registeredelectrician. He said this was paid for entirely in cash at the rate of $25 to $30 an hour.[56] In rejecting these claims and finding that the Commissioner's allegation wasproved on the balance of probabilities, the Judge relied on the totality of the followingevidence:20(a) Statements made by Ms Drake to investigators and in taped phone callsto Mr Stewart that Mr Stewart was the main breadwinner.(b) The fact that immediately after being made redundant in 2010,Mr Stewart had incurred the expense of purchasing an electrician's vanand tools.(c) In a Facebook messaging thread in April 2010, Ms Drake stated thatMr Stewart was doing "cash jobs".20 High Court judgment, above n 1, at [88]–[98].(d) Mr Stewart was a hard worker and self-reliant which indicated that itwould have been entirely out of character for him to have been idle forsuch a long period especially when the couple had a mortgage to payand children to support, one of whom was very young.(e) Statements made by Mr Stewart to Mr Toner that he worked 20 to40 hours a week as an electrician and was paid mainly in cash.(f) Mr Stewart's bank accounts disclosed negligible expenditure on livingcosts pointing to the high probability of cash spending.(g) The level of cash deposits banked. These totalled $40,753.77 at a timewhen his declared income was just under $12,500.(h) The level of home improvements which were only possible onthe couple's earnings if Mr Stewart had substantial undisclosed cashearnings. Since buying the Emmett Street property in 2010, the couplehad installed a new bathroom, new kitchen, a new 53 square metregarage/sleepout fully lined with an ensuite and heat pump, new carpetsand curtains, a new pellet fire, new whiteware, new decking and shadesails, a new front door, and a new fence.(i) Extracts from Mr Stewart's work diary with records of various joblocations and hours.[57] Mr Stewart advanced various innocent explanations for some of this evidence.He said for example that Mr Toner had misunderstood what he said, that the cashdeposits were provided by his father and the entries in the work diaries related toquotes which had not eventuated into work. Mr Stewart also claimed he hadpersonally done most of the home improvements with materials that he had salvagedor scavenged or purchased secondhand and cheaply. The new materials had beenfunded by his father.2121 At [93]–[97].[58] The Judge found that Mr Stewart's explanations lacked credibility and did notaccept them.[59] On appeal, Mr Starling submitted this was an error because the Commissionerdid not provide any evidence to disprove the explanations. There was no evidence todispute the sources of the materials or Mr Stewart's account of his work patterns.In the absence of such evidence, the Judge was wrong to find the allegations proved.[60] We disagree. Having reviewed the evidence ourselves, we considerthe findings were amply justified. Mr Stewart did not call his father to give evidenceand the father's bank accounts did not support the existence of any savings.Mr Stewart was unable to explain how his father could have been in a position tocontinue to provide him with large cash sums. The work diaries included start andfinish times which would not be necessary for a quote. Mr Toner had made acontemporaneous file note of the statement made by Mr Stewart.[61] We therefore reject this ground of appealDid the Judge err in finding that the appellants knew of each other's offending?[62] A person can only be held to have unlawfully benefited from another'soffending for the purposes of the Criminal Proceeds (Recovery) Act if they"knowingly, directly or indirectly, derived a benefit from significant criminalactivity".22[63] The Judge found that Ms Drake must have appreciated that Mr Stewart wasnot meeting his tax obligations and that Mr Stewart must have been aware ofMs Drake's benefit fraud.23[64] On appeal, Mr Starling challenges that ruling on the grounds of inconsistentreasoning. He says on the one hand the Judge found Ms Drake was not capable ofmaintaining a sophisticated double life and that it was implausible she could havedeceived Mr Stewart for 15 years. But at the same time, the Judge also found22 Criminal Proceeds (Recovery) Act, s 7.23 High Court judgment, above n 1, at [147]–[152].Ms Drake knew Mr Stewart was evading tax because she was aware he was being paidin cash and would have no reason to think he was paying tax on those earnings.[65] In Mr Starling's submission, if Ms Drake was naïve and unsophisticatedenough to be incapable of concealing her benefit, then she was also unlikely to besophisticated enough to have any informed knowledge of Mr Stewart's tax obligations.Conversely if Ms Drake was sufficiently astute to intuit that Mr Stewart was evadingtax, then it is just as likely she would be able to conceal her offending from Mr Stewartas she claimed.[66] In our view, those are possible inferences but most unlikely ones having regardto the evidence as a whole. There was for example evidence that even Ms Drake'sworkmates knew she was on a benefit, evidence of taped phone conversations betweenMr Stewart and Ms Drake indicating that he also knew she was on a benefit, evidencethat she had access to funds well in excess of what he could realistically expect shecould have earned, evidence of Mr Stewart giving Ms Drake large sums of cash tobank, and evidence of the way the couple deliberately structured their financial affairsfor which the most plausible explanation was an intent to deceive the authorities.24There was incontrovertible evidence that Ms Drake knew Mr Stewart was being paidin cash and, as Mr Stewart himself acknowledged, she would have no reason to thinkhe was paying tax on those earnings. Both of them were also aware of the substantialinvestment in home improvements.[67] There was ample evidence to support the Judge's finding and we agree with it.Did the Judge err in finding that the contents of bank account suffix 30 were tainted?[68] It will be recalled that Mr Stewart had two ANZ bank accounts. One hadthe suffix 46 and the other suffix 30.24 Particularly, Mr Stewart and Ms Drake maintained separate bank accounts for no clear reason.Moreover, even after they obtained a mortgage with ANZ and Ms Drake began paying her wagesinto an ANZ account, she maintained a separate Kiwbank account, into which her benefit wasbeing paid.[69] The Judge found the funds in ANZ 46 were not tainted property because therewas no evidence the funds were contributed to by either Ms Drake's unlawful benefitpayments or Mr Stewart's unpaid tax.25 There is no cross-appeal from that finding.[70] The Judge came to a different conclusion in relation to ANZ 30 which wasthe account from which the mortgage payments on the Emmett Street property weremade. The reason for the different conclusion in relation to this bank account was thatin 2008 Ms Drake, who received benefit payments in a Kiwibank account, startedpaying money from her Kiwibank account into the ANZ 30 account. The fact thatmoney from the ANZ 30 account was then spent on mortgage payments also meantthe Emmet Street property was tainted.26[71] On appeal, Mr Starling challenges the Judge's reasoning which he says failedto take account of the fact the funds in ANZ 30 were divisible.[72] In his submission, once the funds were debited and paid elsewhere, thenthe bank account ceased to be tainted. He argued that it is the contents of the bankaccount that is the asset, not the bank account. Had the bank account been empty offunds apart from the tainted payment that went in and out, it would not have beenproperty which could have been the subject of an application by the Commissioner.It followed, Mr Starling contended, that the remaining legitimate funds in the accountwere sufficiently severable so that they should not have been included in the assetforfeiture order.[73] We do not accept those submissions. The statutory definition of "taintedproperty" did not require the Judge to confine the property forfeited to an interestcorresponding to the extent the property was tainted. The introduction of any fundsderived from significant criminal activity into a bank account taints the entire account,just as an entire house may be tainted even although it was only partially acquiredfrom significant criminal activity.2725 High Court judgment, above n 1, at [112].26 At [107].27 Commissioner of Police v Doorman HC Nelson CIV-2010-442-169, 15 December 2011 at [36].This decision was appealed in Doorman v Commissioner of Police, above n 14, but this aspect ofthe decision was not overturned on appeal.[74] Issues of the sort raised by Mr Starling are properly reserved for the stage atwhich relief against forfeiture is considered on the grounds of undue hardship.[75] For completeness we note it is not necessary for us to decide whetherthe ANZ 30 account may also have been tainted because it included cash paymentsthat were undeclared income. As Dunningham J observed, there is conflictingHigh Court authority as to whether the cash earnings on which tax has not been paidare themselves tainted property.28 We do not consider the current case is an appropriatevehicle to address that issue.Did the Judge err in finding the forfeiture of the house property and the bank accountwould not cause undue hardship?[76] The Act allows the Court to exclude property from asset forfeiture orders if itconsiders that, having regard to all the circumstances, undue hardship is reasonablylikely to be caused to the respondent by making the orders.29 As the Judge noted,this Court has also accepted that, although a child does not have standing to seekan order for relief in their own right, the impact of forfeiture on a child may also beconsidered and if it would cause undue hardship to the child, that may be influential.30Whether or not undue hardship arises is a matter of fact and degree.[77] The relevant sections further provide that in deciding whether undue hardshipis reasonably likely the Court may have regard to the use that is ordinarily made ofthe property in question, the nature and extent of the respondent's interest inthe property and the circumstances of the significant criminal activity to which theorder relates.31[78] The appellants applied to have the house property and the ANZ 30 accountexcluded from forfeiture because of the undue hardship likely to result for Mr Stewartand their two children, in particular their daughter.3228 High Court judgment, above n 1, at [116]–[118]; citing Commissioner of Police v Dryland HCAuckland CIV-2012-419-242, 30 August 2012 at [22]; and Commissioner of Police v Winsor[2014] NZHC 161 at [33].29 Criminal Proceeds (Recovery) Act, s 51.30 Duncan v Commissioner of Police, above n 14, at [57].31 Criminal Proceeds (Recovery) Act, s 51(2).32 High Court judgment, above n 1, at [121]–[122].[79] In finding undue hardship was not reasonably likely, Dunningham J relied onthe fact that the equity in the house property was largely if not entirely acquiredthrough benefit fraud and tax evasion and that the extent of Ms Drake's benefit frauditself exceeded the equity in the house.33 She also considered that the circumstancesof the significant criminal activity in question pointed against there being unduehardship because the value of the items being forfeited was commensurate withthe extent of the benefits gained from the offending.34[80] As regards the personal circumstances of the appellants, there was evidencetheir daughter had been struggling since her mother's imprisonment and Mr Stewartsaid he was concerned about the effect it would have on her emotional well-being tohave to move home or schools.35 Mr Stewart also told the Judge that if he had to movefrom Emmet Street, that would mean higher living expenses and having to work longerhours which in turn would mean it would be difficult for him to afford to care for heras much as he currently can.[81] The Judge was not persuaded these were hardships that would be caused bymaking forfeiture orders. Rather, they were existing hardships caused by Ms Drake'sincarceration and future hardships caused from having to now rely solely on legitimatesources of income. In her view, those were consequences that did not qualify for reliefand they did not outweigh the legislative policy that makes it clear wrongdoers shouldbe stripped of the proceeds of crime.36[82] In our view, the Judge's reasoning on this issue was unimpeachable.[83] In seeking to argue otherwise, Mr Starling argued the Judge did not have properregard to the fact that Mr Stewart paid the deposit on the house property, servicedthe mortgage payments, and contributed to improving the property. However, in ourview none of those matters whether considered individually or collectively is capableof rendering any hardship undue, having regard to the extent of the wrongdoing.33 At [131].34 At [132].35 At [122].36 At [136].We note too, in relation to the mortgage payments, that these were not in any event allmade from legitimate funds.[84] The extent of the wrongdoing also answers a further submission thatthe hardship caused to Mr Stewart by forfeiture of his bank account was undue becauseof the contingent nature of Ms Drake's interest in the bank account. Ms Whamsubmitted it was contingent on Ms Drake making a claim and being successful.Not only is this submission answered by the extent of the wrongdoing but in our viewany claim for equal sharing under the Property (Relationships) Act 1976 would havebeen certain to succeed.[85] Another argument raised by Mr Starling was that the Judge had setthe threshold of "undue hardship" too high when considering Mr Stewart's position.In his submission, the word "undue" meant something more than ordinary hardshipwas required but only "slightly more". It did not have to be extreme hardship. We donot however consider that the outcome of the Judge's application of the test indicatedthat she was requiring extreme hardship, but rather requiring significantlydisproportionate harm which is in line with the case law and the purposes of the Act.37Did the Judge err in finding the onus to calculate notional entitlement fell onthe appellants?[86] In considering the application for profit forfeiture orders regarding Ms Drake'sbenefit fraud, the Judge addressed arguments that the Commissioner had failed tocalculate what the family would have been lawfully entitled to receive in the way ofbenefits and tax credits (notional entitlement). Mr Starling argued in the High Courtand again before us that MSD had an obligation to calculate the notional entitlement.[87] Section 53 of the Act provides:37 See for example Nicholas v Commissioner of Police [2017] NZCA 473, [2018] NZAR 172 at [57];Commissioner of Police v Doorman, above n 27, at [23] (this aspect of the case was not overturnedon appeal) citing Commissioner of Police v Duncan HC Tauranga CIV-2010-470-933, 11 October2011 at [144] (this aspect of the case was not overturned on appeal); and Commissioner of Policev Nelson HC Auckland CIV-2010-404-989, 30 July 2010 at [73]–[75]; and see, under thepredecessor legislation, Lyall v Solicitor-General [1997] 2 NZLR 641 (CA) at 647.53 Value of benefit presumed to be value in application(1) If the Commissioner proves, on the balance of probabilities, thatthe respondent has, in the relevant period of criminal activity,unlawfully benefited from significant criminal activity, the value ofthat benefit is presumed to be the value stated in—(a) the application under section 52(c); or(b) if the case requires, the amended application.(2) The presumption stated in subsection (1) may be rebutted bythe respondent on the balance of probabilities.[88] The Judge said she accepted that the issue of notional entitlement could reducethe value of the benefit held to have been wrongly received by the appellants forthe purposes of a profit forfeiture order. However, they had failed to adduce anyevidence to quantify what, if any, entitlement they would have had and had thereforefailed to discharge the onus that fell on them under s 53.38 The Judge also stated thatin so far as the suggestion there would have been some entitlement was based on theassertion that Mr Stewart was unemployed or earning a minimal income, that wasunsustainable because of her findings that those were not his circumstances.39[89] As already mentioned, for other reasons the Judge did not in the end make anyprofit forfeiture orders and therefore her rulings on notional entitlement are essentiallyobiter.[90] There has been no cross-appeal against the Judge's decision decliningthe application for a profit forfeiture order and as will be readily apparent we are notminded to quash the assets forfeiture order. However, were we required to reviewthe calculation of the unlawful benefit, we would have rejected Mr Starling'ssubmission that the reverse onus in s 53 does not apply to MSD benefit cases.The cases which Mr Starling cites to support this proposition were not cases decidedunder the Criminal Proceeds (Recovery) Act.4038 High Court judgment, above n 1, at [161].39 At [159].40 Ioane v Department of Social Welfare (1994) 11 CRNZ 489 (HC); and Moody v Chief Executiveof Department of Work and Income [2001] NZAR 608 (HC).[91] We note too there was evidence before the Judge that MSD had attempted tocalculate notional entitlement but had been prevented from doing so becauseMs Drake had failed to respond to a letter raising it. In evidence given at the trial,Mr Toner said in re-examination that there was no entitlement to an MSD benefit incircumstances where Ms Drake was living with her partner throughout and earning anincome.41Outcome[92] The appellants' application for leave to amend the grounds of appeal so as toinclude a ground regarding the validity of the notices issued under s 11 of theSocial Security Act 1964 is granted.[93] The respondent's application for leave to adduce the further evidence ofDarran Thomas Toner is granted.[94] None of the grounds of appeal has merit. The appeal is accordingly dismissed,and the orders made by the High Court confirmed.[95] We were told that Ms Drake and Mr Stewart are legally aided and thereforemake no order as to costs.Solicitors:Crown Solicitor, Christchurch for Respondent41 High Court judgment, above n 1, at [160].