POLICE v SNOOK [2018] NZHC 2537

POLICE v SNOOK [2018] NZHC 2537 [27 September 2018]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-Ā-TARA ROHECIV 2015-485-736CIV 2015-485-772[2018] NZHC 2537BETWEEN THE COMMISSIONER, THE NEWZEALAND POLICEApplicantAND TRACEY MELANIE SNOOKFirst RespondentAND JAYDE THOMAS PAUL SNOOKSecond RespondentAND SARAH LOUISE COLLEDGEThird RespondentAND ANZ BANK NEW ZEALAND LIMITEDFirst Interested PartyAND WESTPAC NEW ZEALAND LIMITEDSecond Interested PartyHearing: 13 March 2018, 31 August and 10 September 2018Counsel: E M Light for ApplicantS J Fraser for First RespondentC J Tennet for Second and Third RespondentsJudgment: 27 September 2018JUDGMENT OF ELLIS J[1] Jayde Snook (Jayde) and Sarah Colledge (Sarah) are in a relationship. TraceySnook is Jayde's mother. The Commissioner of Police (the Commissioner) has appliedfor civil forfeiture orders under the Criminal Proceeds (Recovery) Act 2009 (the Act)against all three of them. The application is made on both assets and profits bases.[2] As regards the former, the Commissioner seeks forfeiture of:(a) the contents of a Westpac account numbered 03 0547 0002034 25, inMs Snook's name, with an approximate balance of $25,080;(b) the contents of an ANZ bank account numbered 06 0549 0399506 00,in Ms Snook's name, with an approximate balance of $84,074.87;(c) the contents of an ANZ bank account numbered 010373 0112339 46,in Mr Snook's name, with an approximate balance of $24,951.51; and(d) all interests in the property at 61 Jillett Street, Titahi Bay, Porirua,registered in the names of Ms Colledge and Mr Snook, and describedin certificate of title WN36CJ788, legal description Lot 5 DP 24876,other than the interests of the ANZ Bank New Zealand Limited underthe registered mortgage instrument number 10159100.3 (Jillett Street).[3] As regards profit forfeiture the Commissioner seeks orders that:(a) the value of the unlawful benefit determined in accordance with s 53 ofthe Act is $534,000;(b) the maximum recoverable amount is $534,000, less the value of anyitems of property which have been forfeit by way of an assets forfeitureorder; and(c) the property to be realised is any of the property listed in the applicationwhich have not been forfeit by way of an assets forfeiture order.[4] All the identified assets are already the subject of restraining orders made underthe Act.Background[5] Through her former partner, Mr Kiritiana Hames, Ms Snook becameacquainted with Mr William Berkland and, later, Mr Steven Blance. Messrs Berklandand Blance are members of the Mongrel Mob who have more recently pleaded guiltyto a raft of serious methamphetamine charges. In June this year they were sentencedto 13 years and three months' and 14 years and six months' imprisonmentrespectively.1[6] Ms Snook says that in 2015 she decided to sell her house at 12 Roberts Street,Tawa. She says she got an appraisal from a real estate agent as to its value. She saysthat at some point Mr Blance approached her and proposed to buy it from her. Sheagreed and Mr Blance paid her in cash which was, quite literally, "dirty".2[7] There is a minor dispute about what the purchase price was; Ms Snook saysthat Mr Blance paid her in lump sums of $30,000 until he reached $250,000. Basedon intercepted communications obtained during the investigation into Messrs Blanceand Berkland the Commissioner puts the figure at $270,000. In light of myconclusions later in this judgment, however, the difference is irrelevant.[8] The Commissioner says, and I accept, that that cash paid to Ms Snookrepresents the proceeds from the sale and supply of methamphetamine byMessrs Blance and Berkland. The evidence also satisfies me that Ms Snook knew oftheir drug dealing activities and, indeed, purchased drugs from them herself.3[9] No written sale and purchase agreement for the Roberts St property was everexecuted. Ms Snook continued to live at the property and to make the mortgage1 R v Berkland [2018] NZHC 1520 and R v Blance [2018] NZHC 1518.2 The Commissioner says that the dirt on the banknotes and their unusual odour is indicative of themoney having previously been buried by Mr Blance.3 For example, there are intercepted communications in which Ms Snook warned Messrs Blanceand Mr Berkland that she had just seen police cars in Roberts St and others which indicate thatshe was involved in purchasing methamphetamine from them for herself and a friend.payments, because the house was still in her name.4 That said, however, Mr Blanceapparently treated the house as his own, and funded renovation work at the property.5[10] Ms Snook says that a mortgage broker advised her to take the money she hadreceived from Mr Blance to the bank. And so it was that, on 23 June 2015, sheattempted to make a large cash deposit at Westpac's Porirua branch. She told the bankstaff that the cash was from the sale of the Roberts Street property. She said she hadabout $170,000 in cash in a supermarket bag, but had not counted it.[11] When Ms Snook was unable to produce a copy of any sale and purchaseagreement, the staff at Westpac refused to accept the deposit. As I understand it, itwas at this point that the police were alerted.[12] Ms Snook then started making smaller cash deposits into bank (ANZ andWestpac) accounts operated by herself, Jayde and Sarah. Each of these deposits werejust under $10,000, which is the maximum cash deposit that can be made withoutactivating reporting requirements.[13] A police forensic accountant, Mr Jatin Mistry has subsequently carried out afinancial analysis of all the respondents' bank accounts. His analysis established thatbetween 8 June 2015 and 18 September 2015, $200,180 in cash was deposited intothese accounts. $45,920 of this amount was deposited into Jayde's accounts and$45,340 into Sarah's.[14] On 29 June 2015, Jayde and Sarah applied for a home loan from ANZ tosupport an offer on the Jillett Street property. They said the deposit would be fundedby each of them contributing $45,000 in cash each which they said was a gift fromMs Snook's father (and Jayde's grandfather) Maurice Snook. The bank advised thatif Mr Snook was intended to give them those amounts there would need to besupporting letter. The home loan application was declined in the meantime.4 Ms Snook continued to live at Roberts Street for another two months, at which point the housewas raided by police.5 Indeed, as I note below, in related proceedings the Commissioner has successfully contended thatMr Blance assumed "effective control" of the property.[15] On 30 July 2015 Jayde and Sarah executed a sale and purchase agreement forthe Jillett St property. The purchase price was $330,000. Shortly afterwards theymade a second application for an ANZ home loan through a mortgage broker. Theloan application was accompanied by a gifting letter stating that Mr Maurice Snookhad gifted them $45,000 each. This was, of course, not true; Jayde has since admittedassisting in its fabrication.6 The loan was approved.[16] Ultimately the purchase price was made up of the following amounts:(a) approximately $21,500 withdrawn from Jayde's KiwiSaver account;7(b) $44,500 of the funds deposited in Jayde's and Sarah's accounts byMs Snook; and(c) an ANZ loan of $264,000.[17] Subsequently, more of the money deposited in their accounts by Ms Snookwere used by Sarah and Jayde to by a DVR system, a dishwasher and furniture fortheir house.[18] When Ms Snook was first spoken to by police about the deposits she did notmention that she had sold her house, and over time she gave a number of differentexplanations for being in possession of large amounts of cash. She later deposed that"Steven Blance wasn't happy that I should say that. It didn't look good for them. Theywere friends and I didn't want to get anyone in trouble".[19] No charges have been laid against any of the respondents, but theCommissioner says that their actions amount to money laundering,8 and (in relation tothe ANZ mortgage) obtaining by deception.6 Prior to Mr Snook's death in November 2016, he made a statement to police confirming that hehad not gifted any money and that he had signed the gifting certificate at the request of therespondents.7 Jayde puts the KiwiSaver figure at $23,000.8 An affidavit was filed in which Detective Sergeant Gray gave expert evidence about what moneylaundering is and how it is undertaken. In essence, it is "the process of converting cash or otherproperty derived from criminal activity to give it the appearance of having been obtained from alegitimate source."[20] In parallel forfeiture proceedings relating to Mr Blance, the Commissionerobtained a restraining order over the Roberts Street property on the basis thatMr Blance had "effective control over it".9 Although the forfeiture applications inthose proceedings have yet to be determined, on 31 August 2017, Collins J granted anapplication by the Commissioner for the sale of the property, on the basis thatMr Blance's effective control over the property was to be treated as an interest inproperty. He noted that:(a) Mr Blance had confirmed that he had no interests in the property andso did not oppose the sale orders being made; and(b) Ms Snook (who had been named as an interested party) had confirmedthat she did not oppose the sale orders being made.[21] As I understand it, the property has, in fact, since been sold for $325,000 andthe proceeds remain restrained, and are sought to be forfeit to the Crown.[22] Before turning to identify and consider the merits of the forfeiture applications,it is useful to set out the relevant parts of the statutory forfeiture regime.The Criminal Proceeds (Recovery) Act 2009[23] The Act permits the Court to make a number of different kinds of forfeitureorders, including orders of the kind sought here by the Commissioner.Asset forfeiture orders[24] Section 50(1) of the Act provides:10If, on an application for an assets forfeiture order, the High Court is satisfiedon the balance of probabilities that specific property is tainted property, theCourt must make an assets forfeiture order in respect of that specific property.9 Commissioner of Police v Blance CIV-2017-485-197.10 Section 50(1) is subject to s 51, which provides the Court with the discretion to exclude certainproperty from an assets forfeiture order if the Court considers that "having regard to all of thecircumstances, undue hardship is reasonably likely to be caused to the respondent if the propertyis included in the assets forfeiture order".[25] The phrase "tainted property" is defined in s 5(1) of the Act as meaning anyproperty that has, wholly or in part, been either:(a) acquired as a result of significant criminal activity; or(b) directly or indirectly derived from, more than one activity if at least oneof those activities is a significant criminal activity.[26] Section 51(1) empowers the Court to exclude certain property from an assetsforfeiture if, having regard to all the circumstances, it considers that undue hardship islikely to be caused to the respondent by the inclusion of that property in the order.Subsection (2) lists (inclusively and without limitation) the circumstances which maybe taken into account:(a) the use that is ordinarily made or was intended to be made of therelevant property;(b) the nature and extent of the respondent's interest in the property; and(c) the circumstances of the significant criminal activity to which the orderrelates.Profit forfeiture orders[15] Section 55(1) requires the High Court to make a profit forfeiture order: if it is satisfied on the balance of probabilities that—(a) the respondent has unlawfully benefited from significantcriminal activity within the relevant period of criminalactivity; and(b) the respondent has interests in property.[27] Section 55(1) needs to be read in conjunction with the statutory definitions of"significant criminal activity" and "relevant period of criminal activity". The formerterm is defined in s 6 of the Act as activity engaged in by a person which, if chargeswere laid, would amount to offending:11(a) that consists of, or includes, one or more offences punishable by amaximum term of imprisonment of 5 years or more; or(b) from which property, proceeds or benefits of a value of $30,000 or morehave directly or indirectly, been acquired or derived.[28] Subsection (2) of the definition provides that:A person is undertaking an activity of the kind described in subsection whetheror not -(a) the person has been charged with or convicted of an offence inconnection with the activity; [29] And the latter term ("relevant period of criminal activity") is relevantly definedin s (1) to mean: the period that ends on the date the application is made and starts 7 yearsbefore (a) the date of the application for the relevant restraining order, ifthe application for the profit forfeiture order relates, whollyor in part, to restrained property;[30] As well, s 7 provides that, in terms of the Act, a person has "unlawfullybenefited from significant criminal activity": if the person has knowingly, directly or indirectly, derived a benefit fromsignificant criminal activity (whether or not that person undertook or wasinvolved in the significant criminal activity).[31] Section 52 requires that an application for a profit forfeiture order must:(a) name the respondent; and(b) describe the significant criminal activity within the relevant period ofcriminal activity from which the respondent is alleged to haveunlawfully benefited; and11 The fact that it is not a prerequisite to the making of an order that the criminal activity concernedhas resulted in criminal proceedings is confirmed by ss 15 and 16.(c) state the value of that benefit; and(d) identify the property in which the respondent holds interests and thenature of those interests.[32] Once the Commissioner proves on the balance of probabilities that arespondent has unlawfully benefitted from significant criminal activity, s 53 places theonus on the respondent to disprove the level of that benefit. This reverse onus is saidto be consistent with the Act's focus on unexplained wealth, rather than on theunderlying criminal acts (from which the offender may have been able to distancehimself where the criminal standard of proof applies).[33] Section 54 requires that, before making a profit forfeiture order, the Court mustdetermine the maximum recoverable amount by -(a) taking the value of the benefit determined in accordance with section53; and(b) deducting from that the value of any property forfeited to the Crownas a result of an assets forfeiture order made in relation to the samesignificant criminal activity to which the profit forfeiture order relates.[34] And s 55(2) provides that the order must specify -(a) the value of the benefit determined in accordance with section 53; and(b) the maximum recoverable amount determined in accordance withsection 54; and(c) the property that is to be disposed of in accordance with section 83(1),being property in which the respondent has, or is treated as having,interests.[35] Section 55(3) provides that subs (1) and (2) are subject to s 56 which, like s 51,empowers the Court, on application, to exclude certain property from the reach of aprofit forfeiture order on the grounds of undue hardship.The grounds of opposition[36] The orders sought by the Commissioner have been set out at the beginning ofthis judgment.[37] The orders are opposed by Ms Snook on the grounds that:(a) no criminal charges have been laid against her; and(b) she received no benefit from the alleged criminal activity (because anymoney she received constituted the purchase price for her house).[38] It can immediately be recorded that the first of these grounds cannot succeed.While I accept Mr Fraser's advice that he has been unable to find any other case inwhich forfeiture orders have been made in the absence of pending or resolved chargesagainst the relevant respondent, the Act is very clear in that regard. Section 15specifically states that the existence of criminal proceedings in relation to the relevantsignificant criminal activity is not a prerequisite to the operation of the forfeitureregime under the Act.[39] As to the second ground of opposition, the review of the statutory provisionsabove also makes it clear that proof of some kind of benefit is not a precondition forthe making of an asset forfeiture order; all that needs to be shown is that the relevantproperty is "tainted". That said, however, the second ground may potentially berelevant in relation to the profit forfeiture application. That is because the onus is onthe Commissioner to establish that a respondent has unlawfully benefitted fromsignificant criminal activity. And even though the Commissioner's assessment of thevalue of any such unlawful benefit is presumed correct, it may be rebutted by arespondent. So I address those matters later in this judgment.[40] Putting the issue of defences to one side, however, all three respondents havealso applied under ss 51 and/or 56 for orders ameliorating the harshness of anyforfeiture orders on the grounds of undue hardship. That, too, is a matter which willneed to be explored further, after I set out my assessment of the prima facie merits ofthe Commissioner's forfeiture applications. It is to that assessment I now turn.Assets forfeiture[41] The question is whether I am satisfied, on the balance of probabilities, that eachasset sought to be forfeit is tainted. This requires me to determine whether it isproperty that has, wholly or in part, been either:(a) acquired as a result of significant criminal activity; or(b) directly or indirectly derived from, more than one activity if at least oneof those activities is a significant criminal activity.[42] Here, the Commissioner says that the relevant significant criminal activity asa result of which the property has been acquired is:(a) in relation to all the property, money laundering; and (as well)(b) in relation to the Jillett Street property, obtaining by deception.[43] It is not entirely clear to me why the application was not also advanced on thebasis that the relevant significant criminal activity was (Mr Blance's)methamphetamine offending.[44] In any event, it is clear to me that the cash paid by Mr Blance to Ms Snookostensibly for the purchase of her house is tainted, as is any asset that was (wholly orin part) subsequently acquired with it. Putting to one side my view that (on the balanceof probabilities) the cash was the proceeds of drug dealing, I accept that the housetransaction constituted a form of money laundering in terms of s 243 of the CrimesAct 1961 (the CA), which relevantly provides:(1) For the purposes of this section and sections 243A, 244 and 245,—conceal, in relation to property, means to conceal or disguise the property; andincludes, without limitation,—(a) to convert the property from one form to another:(b) to conceal or disguise the nature, source, location, disposition,or ownership of the property or of any interest in the propertydeal with, in relation to property, means to deal with the property in anymanner and by any means; and includes, without limitation, -(a) to dispose of the property, whether by way of sale, purchase,gift, or otherwise:(b) to transfer possession of the property:(c) to bring the property into New Zealand:(d) to remove the property from New Zealandoffence means an offence (or any offence described as a crime) that ispunishable under New Zealand law, including any act, wherever committed,that would be an offence in New Zealand if committed in New Zealandproceeds, in relation to an offence, means any property that is derived orrealised, directly or indirectly, by any person from the commission of theoffenceproperty means real or personal property of any description, whether situatedin New Zealand or elsewhere and whether tangible or intangible; and includesan interest in any such real or personal property(2) Subject to sections 244 and 245, every one is liable to imprisonmentfor a term not exceeding 7 years who, in respect of any property thatis the proceeds of an offence, engages in a money launderingtransaction, knowing or believing that all or part of the property is theproceeds of an offence, or being reckless as to whether or not theproperty is the proceeds of an offence.(4) For the purposes of this section, a person engages in a moneylaundering transaction if, in concealing any property or by enablingany person to conceal any property, that person—(a) deals with that property; or(b) assists any other person, whether directly or indirectly, to dealwith that property.(4A) Despite anything in subsection (4), the prosecution is not required toprove that the defendant had an intent to—(a) conceal any property; or(b) enable any person to conceal any property.(5) In any prosecution for an offence against subsection (2) or subsection(3),—(a) it is not necessary for the prosecution to prove that thedefendant knew or believed that the property was the proceedsof a particular offence or a particular class of offence:(b) it is no defence that the defendant believed any property to bethe proceeds of a particular offence when in fact theproperty was the proceeds of another offence.[45] It must be said that s 243 is not a model of clarity. Nonetheless after receivingfurther submissions from the Commissioner on the issue I am satisfied that that theevidence establishes that:(a) the cash Ms Snook received from Mr Blance was property that was theproceeds of a serious [drug dealing] offence;(b) by taking and depositing the money in accounts operated by her and herson and daughter in law Ms Snook engaged in a "money launderingtransaction", because she:(i) "concealed" the cash in that she concealed or disguised itssource (ie Mr Blance and his drug dealing activities); and(ii) assisted Mr Blance to "deal" with the cash, ie to dispose of it bytransferring possession to her (purportedly in return for herhouse).(c) Ms Snook knew, or was reckless as to whether, the cash was theproceeds of a serious offence.[46] These conclusions suffice to establish that the cash and Jillett Street are taintedproperty. For completeness and the avoidance of doubt, however, I also record myview that asset forfeiture orders could be made in relation to Jillett Street on thealternative grounds that the relevant "significant criminal activity" is obtaining bydeception. The relevant offence is found in s 240 of the CA, which relevantlyprovides:12(1) Every one is guilty of obtaining by deception who, by anydeception and without claim of right,—(a) obtains ownership or possession of, or control over, anyproperty, or any privilege, service, pecuniary advantage,benefit, or valuable consideration, directly or indirectly; (2) In this section, deception means—(a) a false representation, whether oral, documentary, or byconduct, where the person making the representation intendsto deceive any other person and—(i) knows that it is false in a material particular; [47] Here, the Commissioner's contention is that Jayde and Sarah obtainedownership of Jillett Street by making a knowingly false representation to themortgagee (ANZ) as to the source of the cash they were using to fund the deposit. Itis not disputed that such a false representation was knowingly made or that, withoutthat representation, the mortgage would not have been forthcoming and the propertycould not have been purchased. It also seems clear that the property obtained need notbe limited to what was actually obtained from ANZ as a result of the deception, namelythe mortgage. That is not only because of the words "directly or indirectly" in the Actbut also because the courts have held that the requirement that the defendant obtain abenefit does not require proof of any corresponding detriment to another person.13[48] Accordingly, I consider that the fourth assets forfeiture order sought by theCommissioner (see [1(d)] above) could also be made on the ground that theJillett Street property is tainted because it was acquired as a result of significantcriminal activity, namely obtaining by deception. Again, for reasons that will becomeobvious, I record at this point that the Commissioner's application in this regard12 The penalties for obtaining by deception are contained in s 241. Where the value obtained is over$1,000 the maximum sentence is seven years' imprisonment.13 Li v R [2016] NZCA 237 at [28].expressly excludes the interests of the ANZ Bank New Zealand Limited under theregistered mortgage.[49] In any event, and subject to any application under s 51 of the Act based onundue hardship (discussed later below), the Court is therefore required to make anorder forfeiting all the assets identified in the Commissioner's application. The effectof such an order would be that the remaining cash and Jayde and Sarah's interests inJillett Street (effectively their net equity in the property) vest in the Crown absolutely.Profit forfeiture order[50] As noted above, s 55(2) provides that a profit forfeiture order must specify(a) the value of the benefit determined in accordance with section 53; and(b) the maximum recoverable amount determined in accordance withsection 54; and(c) the property that is to be disposed of in accordance with section 83(1),being property in which the respondent has, or is treated as having,interests.[51] There is no property of the kind referred to in (c) here and so I put that to oneside. Rather:(a) the value of the benefit under s 53 is said by the Commissioner to be$534,000, which comprises:(i) $270,000 in funds received by Ms Snook for the "sale" of herhouse; and(ii) $264,000 in "unlawfully obtained mortgage funds from theANZ bank"; and(b) the s 54 "maximum recoverable amount" is to be derived by taking thatamount less the value of any property forfeited to the Crown as a resultof the assets forfeiture order made in relation to the same significantcriminal activity to which the profit forfeiture order relates.14[52] As noted earlier, the s 53 value of the unlawful benefit, the Commissioner'sasserted value is presumed to be correct. But as I have also said, that presumption ispredicated on the Commissioner first establishing (the onus being on him) that therespondent has unlawfully benefitted from significant criminal activity. Moreover, thes 53 presumption can be rebutted by the respondent(s) on the balance of probabilities.Both matters are at issue here, because the respondents (between them) contend that:(a) the Commissioner has not proved that Ms Snook unlawfully benefittedfrom significant criminal activity; and(b) the mortgage funds received by Mr Snook and Ms Colledge cannotproperly (in law) be regarded as a "benefit".[53] I interpolate that, notwithstanding my conclusion that the grounds for assetforfeiture orders have been made out, these questions are not academic. That isbecause the amount of the asserted unlawful benefit exceeds the value of the taintedassets.15 The difference between the two amounts (which by my calculation is around$250,000) would, if the profit forfeiture orders sought by the Commissioner aregranted, then constitute a debt owed to the Crown by the respondents. It thereforeremains in the respondents' interests to seek to rebut the s 53 presumption that thevalue of the unlawful benefit received by them is $534,000.Did Ms Snook unlawfully benefit from significant criminal activity?[54] I have set out the s 7 definition of the term "unlawfully benefit from significantcriminal activity" above. To reiterate, however, a person does so, if he or she:14 The significant criminal activity relied on by the Commissioner is, again, both the moneylaundering and the obtaining by deception.15 In broad terms, the value of the forfeited property would be approximately $134,000 (thecombined total of the three cash amounts) together with the value of the second and thirdrespondents' net equity in Jillett Street, which (based on information received at the hearing thatthe current capital value of the property is $410,000) is likely to be around $150,000. has knowingly, directly or indirectly, derived a benefit from significantcriminal activity (whether or not that person undertook or was involved in thesignificant criminal activity).[55] Although the Commissioner relies on both the money laundering and theobtaining by deception as the relevant "significant criminal activity" for the purposesof the profits forfeiture application, the latter can be put to one side in the case ofMs Snook. It was not contended by the Commissioner that she derived a benefit fromthe acquisition of Jillett Street (which was the object of the obtaining by deception);she is not a registered owner of that property and does not, as I understand it, livethere.[56] So the question is: has Ms Snook knowingly, directly or indirectly, derived abenefit from the money laundering activity which (I have found) has been establishedhere. She says that she has not because she received the money from Mr Blance inexchange for her house in Roberts Street. Although there was no formal transfer ofownership the Commissioner accepts that the property came under Mr Blance'seffective control and, indeed, it is on that basis that he now seeks an assets forfeitureorder in relation to the proceeds of the sale of the Roberts Street property in separateproceedings under the Act involving Mr Blance.16[57] Proceeding on the assumption that the $270,000 she received from Mr Blanceequated in broad terms to the value of the house (although there is a suggestion thatthis may have been a little less than its market value) can an exchange of assets of likeworth constitute a "benefit"? The answer must be: "it depends".[58] In the present case, there was clearly a benefit (or advantage) to Mr Blance inthe exchange. Indeed, his obtaining that advantage was the whole point of the moneylaundering transaction; obtaining a "clean" asset in exchange for "dirty" money andthereby concealing both the proceeds and the evidence of his serious drug offending.17[59] Any advantage to Ms Snook is much less clear. On the most obvious analysisall she obtained by the transaction was a world of grief. In short:16 Above, n 9.17 Valuing such a benefit may, however, be more problematic.(a) she "sold" (or yielded effective control over) a valuable andlegitimately acquired asset to Mr Blance;(b) while Mr Blance's payment of cash to Ms Snook in return may haveconstituted a money laundering transaction, there is no evidence thatshe received any payment (over and above the payment for the RobertsStreet property) for participating in that transaction;18(c) for the reasons already given the Court is required to make an assetsforfeiture order in relation to the money she received for her theproperty; and(d) the Commissioner has now obtained a sale order for the Roberts Streetproperty and continues to seek forfeiture of the proceeds in the Blanceproceedings.[60] As I understand it, the Commissioner's position is that Ms Snook did,nonetheless, receive a "benefit" because the $270,000 cash is both "proceeds" and"property", in terms of the inclusive s 5 definition. Essentially he says that receipt ofthat money must, by definition, constitute a benefit. But this latter proposition seemsto me to ignore the existence and reciprocal nature of the underlying transaction. Itmost certainly ignores the consequences. And the former proposition appears to meto invite the Court rigidly to apply the statutory definition of "benefit" with no regardeither for common usage or for the purposes of the Act. The following points canusefully be made.[61] First, it seems to me that the point of the statutory definition is simply to makeit clear that a "benefit" can take the form of either cash or tangible property. Thedefinition can and, in my view, must also be read consistently with the ordinarymeaning of that term which (as the relevant dictionary definition makes clear) means"pecuniary advantage, profit or gain".1918 My own sense of the matter (having seen Ms Snook give evidence and read a psychiatric reportfiled on her behalf) is that she is a naïve and highly susceptible woman who had the greatmisfortune to come under the thrall of Messrs Blance and Berkland.19 Oxford English Dictionary (online ed, Oxford University Press, 2018).[62] That the use of the word "benefit" in the Act should, in fact, import thatordinary meaning is clear from Act's primary purpose is set out in s 3(1), as follows: to establish a regime for the forfeiture of property—(a) that has been derived directly or indirectly from significant criminalactivity; or(b) that represents the value of a person's unlawfully derived income.Those twin objects are made manifest, of course, in the provisions relating to themaking of assets forfeiture orders (limb (a)) and profit forfeiture orders (limb (b)).Interestingly, although the second object expressly refers to unlawfully derived"income", the words "profit" and "benefit" appear to have been substituted forelsewhere in the Act and in the forfeiture provisions themselves.20 But theinterchangeability of those words appears to me to have some significance here.[63] The signal point is that the assets forfeiture provisions contemplate and,indeed, require the forfeiture of tainted property regardless of whether they representany benefit or profit to the relevant respondent. The conclusion I have already reachedin the present case reflects that. But as the term suggests, profit forfeiture orders areconcerned with "profit" which, like "benefit", connotes a gain or surplus. The purposeof such an order is to ensure that a respondent is not better off as a result of the relevantoffending than he or she was before. It seems to me that the word "benefit" must alsobe interpreted in that context and in that light.[64] Given that the Roberts Street property has been sold by the Official Assigneeand the proceeds are now liable to forfeiture Ms Snook is, plainly, no better off as aresult of her money laundering activity, even prior to the forfeiture of the cash in theseproceedings. In my view, therefore, the Commissioner has not discharged the onus ofestablishing that Ms Snook has derived a benefit as a result of her money launderingactivity.20 Section 3(2) emphasises (inter alia) the legislative aim of eliminating "the chance for persons toprofit from undertaking or being associated with significant criminal activity". The word"income" only appears in one other place in the Act: see s 160, which deals with legal professionalprivilege.[65] By way of post-script I record that because the Commissioner's position wasthat the value of all of the cash received by Ms Snook from Mr Blance should beincluded in the calculation of the benefit under s 52, there was no alternative focus onwhether (if it was not so included) the transfer of some of that cash by Ms Snook tothe Jayde and Sarah meant that they had, to that extent, unlawfully benefitted from thesignificant criminal (money laundering) activity. Given that receipt of those funds wasplainly of benefit to them, the question would be whether they knew that the fundswere derived from significant criminal activity, or were wilfully blind to thatpossibility. Jayde's evidence was that he believed that the money was the result of hismother selling her house and that he "never suspected drugs or anything". It was notput to him that this was untrue, and neither Jayde nor Sarah were asked whether theyknew about Mr Blance or his involvement with Ms Snook. I can take that issue nofurther.Are the mortgage funds a "benefit" to the Jayde and Sarah?[66] The Commissioner's position is that Jayde and Sarah unlawfully benefittedfrom significant criminal activity (ie the obtaining by deception) and that the value ofthe benefit equates to the $264,000 in mortgage funds they received from ANZ. Hesays that his quantification of the "unlawful benefit" in this way is presumed bys 53 to be correct and has not been rebutted by any evidence called by the respondents.[67] I am, however, unable to agree with that submission. The question is notevidentiary; it is a question of statutory interpretation. The issue is whether the word"benefit" can possibly be interpreted as including such funds. That is the issue Idiscuss below.[68] It cannot, I think, be disputed that the "mortgage funds" here constitute moneythat was loaned by the ANZ bank to Jayde and Sarah. The loan was secured over theJillett Street property and there can be no doubt that the bank would take steps torealise the security in the event of default.[69] In Federal Commissioner of Taxation v Rawson Finances Pty Ltd the FederalCourt of Australia said:21The essence of a loan of money from A to B is a correspondingcontemporaneous obligation on the part of B to repay the money transferredfrom A to B ... Absent that obligation, the transfer of the money from A to Bis something else - a gift, a payment by direction, a payment or repayment ofan anterior obligation - but it is not a loan.[70] In other words, by definition, a loan gives rise to a debt in the same (or agreater) amount; the former does not exist without the latter. To the extent that loanadvances could be said to constitute an asset, their value is offset by a correspondingliability. It is for these reasons that a loan is not, in general, regarded as "income"22or a "profit". And similarly, without more, I think it cannot properly be regarded as a"benefit" in the context of the Act.[71] In terms of what that "more" might be, I accept that there might be some,ancillary, financial benefit that could be said to be derived from obtaining a home loan.Capital gain is one such but the Commissioner has not sought to place a value on that.In any event, any capital gain forms part of the respondents' equity in the Jillett Streetproperty which is already subject to the assets forfeiture order. Another possible,additional, benefit might arise where a mortgagor's weekly or monthly mortgagepayments go to paying off principal as well as interest and are in the same amount as(or less than) the rent that the mortgagor would otherwise have been paying. But evenaside from any issue of remoteness (in terms of the connection between such a benefitand the relevant criminal activity) no such benefit has been calculated or claimed hereand I can take that point no further.[72] My conclusions in this regard are underscored by what would be the statutoryconsequences of the Commissioner's position here. As noted earlier, the "maximumrecoverable amount" (ie the amount arrived at after deducting the value of taintedassets that have been forfeit from the value of the unlawful benefit stated in theCommissioner's application) constitutes a debt due to the Crown and may be21 Federal Commissioner of Taxation v Rawson Finances Pty Ltd [2012] FCA 753, (2012) 89 ATR357 at [20].22 See the recent discussion in (inter alia) a home loan context in F v Ministry of Social Development[2018] NZHC 1607.recovered as such from a respondent. So if the unlawful benefit includes the"mortgage funds", the respondents would effectively be liable to pay to the Crown theamount of their debt to the ANZ bank, notwithstanding that they continue to owe thatamount to the bank as well.23 Equally, if the property were to be sold, the bank wouldbe repaid out of the proceeds but (on the Commissioner's analysis) Jayde and Sarahwould not only forfeit their equity but would continue to owe the Crown the amountof the mortgage. While I accept that the operation of the Act is intended to be deterrentand therefore punitive, that outcome seems to me to be beyond the pale.[73] I am therefore unable to accept that the mortgage funds can legitimatelyconstitute a "benefit" for the purposes of ss 52 and 53.Conclusions[74] For the reasons I have given I decline to make a profit forfeiture order eitherin the terms sought or at all. In light of my conclusions and the point made at [66]above, the only order I could make is that the value of the benefit determined inaccordance with s 53 is zero. The maximum recoverable amount under s 54 wouldtherefore be negative.Undue hardship?[75] Despite that finding, the prospect of asset forfeiture orders remain. I haveconcluded that I am required to make those orders, subject only to the question ofundue hardship under s 51.[76] The term "undue hardship" is not defined in the Act. The courts have, however,made it clear that it requires something out of the ordinary and more than the hardshipthat arises inevitably out of a forfeiture order.24 As Collins J said in Commissioner ofPolice v Ranga:2523 Jayde and Sarah have continued to meet the mortgage payments while the restraining ordersremain in place.24 Solicitor-General v de Bruin [2004] 3 NZLR 540, (2004) 20 CRNZ 933 at [22(b)].25 Commissioner of Police v Ranga [2013] NZHC 745 (citations omitted).[37] The threshold for relief for a person in Mrs Ranga's position is set ata high level. It requires Mrs Ranga to show not merely inconvenience ordifficulty but that any hardship she will suffer will be disproportionate to thegravity of her offending.[38] In Lyall v Solicitor-General the Court of Appeal held that unduehardship should be assessed in light of the legislative policy that wrongdoersshould be stripped of proceeds of crime. Therefore any disproportion betweena respondent's offending and the value of the property sought to be forfeitedmust be gross or severe before relief can be justified.Ms Snook's application[77] The circumstances that appear most relevant to Ms Snook's application arethat:(a) notwithstanding that it has been tainted by money laundering activity,the cash that is liable to be forfeited represents a payment she receivedin return for an asset that she owned and had acquired legitimately;(b) while the Roberts Street property (effectively her family home) waslegally owned by her, the Commissioner has sold it and now seeks itsforfeiture on the grounds that it was under Mr Blance's effectivecontrol; and(c) despite any conclusion that she engaged in serious criminal activity (asdefined in the Act) she has never been charged with any such offending.[78] In my view, however, the question of undue hardship to Ms Snook is moreappropriately addressed in the Blance proceedings rather than in these present. Thatis because it is the nature and extent of Ms Snook's interest in the Roberts Streetproperty that seems more naturally the proper focus of a s 51 inquiry in her case.While, on the basis of the information before me, I would be inclined to the view thatundue hardship would be caused to Ms Snook in the event that the cash she receivedfrom Mr Blance and the proceeds from the sale of the Roberts Street property are allentirely forfeit, I am reluctant to come to a firm conclusion about that in the absenceof a complete evidentiary picture.Jayde and Sarah's application[79] The circumstances that appear most relevant to Jayde and Sarah's applicationare that:(a) if their equity in Jillett Street is forfeit to the Crown, that will lose:(i) Mr Snook's legitimate KiwiSaver funds which totalled around$22,000;(ii) their own contributions to the mortgage payments, rates andother outgoings on the house and continue to do so; and(iii) the likely capital gain made since the date of purchase; and(b) they have never been charged with any criminal offending.[80] Mr Tennet also stressed that given their age (mid to late 20s) and economiccircumstances they are unlikely to be able ever to afford another house in the currentproperty market, if they are deprived of all their equity in the Jillett Street property.[81] In order to determine whether the forfeiture of their equity would cause unduehardship to Jayde and Sarah the gravity of the relevant criminal activity must beweighed against the effect of the forfeiture on them, including the value of the propertyof which forfeiture would otherwise be ordered.[82] As regards the gravity of the offending, the offence of obtaining by deception(where the thing obtained is worth more than $1000) carries a maximum penalty ofseven years' imprisonment. So while that qualifies as "serious criminal activity" interms of the Act it is hardly activity at the gravest end of the spectrum. Given thatJayde and Sarah have not, in fact, been charged with any offence, it is not possible toknow what actual sentence their activity might have attracted. It can, however,reasonably be assumed that it would be relevant to that inquiry that their deceptioncaused no material harm to any other person. While the false certificate induced theANZ bank to advance them funds, the terms of the resulting loan have been honoured,interest has been paid and there is no prospect that (in the event the house is sold) themortgage debt will not be repaid.[83] As regards the effects of forfeiture, I am not persuaded by Mr Tennet'sargument that Jayde and Sarah's ongoing contributions to the mortgage, rates andoutgoings should be recognised as giving rise to undue hardship in the event offorfeiture. The mortgage was, of course, the object and the result of the deception. Inany event, no evidence was provided (for example) as to the amount of principal paidoff. Clearly, Sarah and Jayde would have been paying rent in any event. And it seemsclear that the items purchased for the house (DVR, dishwasher etc) were purchasedwith the tainted funds.[84] Rather, the issue that gives me most cause for concern relates to Jayde'sKiwiSaver savings. There can be no doubt that these were acquired legitimately. Morebroadly, the KiwiSaver regime has important social objects which militate against theforfeiture of such savings. Although both Jayde and Sarah are employed, neither hassignificant earning power and there can be little doubt it would take some considerabletime to accumulate funds in that amount again.[85] In my view, therefore, forfeiture of the KiwiSaver funds would be grosslydisproportionate to the gravity of the criminal activity here and such forfeiture would,therefore, constitute undue hardship to Jayde and Sarah. An order excluding the sumof $25,000 (which is intended to represent the amount of those funds with a smallamount added for the lost opportunity to benefit from any growth in those funds) fromthe assets forfeiture orders is appropriate here.Formal Orders[86] For the reasons I have given:(a) the application for profit forfeiture orders is declined.(b) the application for asset forfeiture orders is granted, in relation to thefollowing property:(i) the contents of a Westpac account numbered 03 0547 000203425, in Ms Snook's name, with an approximate balance of$25,080;(ii) the contents of an ANZ bank account numbered 06 05490399506 00, in Ms Snook's name, with an approximate balanceof $84,074.87;(iii) the contents of an ANZ bank account numbered 0103730112339 46, in Mr Snook's name, with an approximate balanceof $24,951.51; and[87] Ms Snook's undue hardship application in relation to these assets forfeitureorders is denied on the basis that the question of such hardship is more properlydetermined in the context of the Blance forfeiture proceedings. As Mr Fraser said,Ms Snook will need to make an application in those proceedings under s 67 of the Actfor relief in relation to the proposed forfeiture of the (proceeds of) the Roberts Streetproperty.[88] I also make an assets forfeiture order in relation to all interests in the propertyat 61 Jillett Street, Titahi Bay, Porirua, registered in the names of Ms Colledge andMr Snook, and described in certificate of title WN36CJ788, legal description Lot 5DP 24876, other than:(a) the interests of the ANZ Bank New Zealand Limited under theregistered mortgage instrument number 10159100.3; and(b) $25,000, being an amount approximating Mr Snook's legitimatelyearned and saved KiwiSaver funds which he applied to the purchase ofthat property.[89] Counsel are to advise any further terms that may be necessary in relation tothis last order. My clear view is that the order should be framed in a way which ensuresthat, on receipt of those funds, they are only to be put towards the purchase of anotherproperty or to be reinvested by Mr Snook in his KiwiSaver account.Concluding comment[90] In my experience, applications under the Act are often time consuming andcomplex. This decision is proof of that. I merely record my view, for the benefit offuture applications, that the complexity here was largely caused by theCommissioner's additional and (as it transpired) pointless application for profitforfeiture orders. Even if that application had succeeded, the prospect of recovering afurther $250,000 from the respondents in the present case would be negligible, at best.So while I appreciate the desire to ensure that all bases are covered, the reality of thematter is that in a case such as this, the Commissioner is very unlikely to obtainanything more than the realisation of the assets he has already restrained and in respectof which forfeiture is likely to be much more straightforward.___________________________Rebecca Ellis J