THE COMMISSIONER, NEW ZEALAND POLICE v CHENG [2023] NZHC 606

THE COMMISSIONER, NEW ZEALAND POLICE v CHENG [2023] NZHC 606 [24 March 2023]IN THE HIGH COURT OF NEW ZEALANDGISBORNE REGISTRYI TE KŌTI MATUA O AOTEAROATŪRANGANUI-A-KIWA ROHECIV-2016-416-12CIV-2016-416-46CIV-2019-416-4[2023] NZHC 606UNDER the Criminal Proceeds (Recovery) Act 2009BETWEEN THE COMMISSIONER, NEW ZEALANDPOLICEApplicantAND THOMAS CHENGFirst RespondentMASONIC LIMITEDSecond RespondentREDOUBT HOUSE LIMITEDThird RespondentACTION INVESTMENTS LIMITEDFourth RespondentACTION INVESTMENT LLPFifth RespondentHARVEST PROPERTY LLPSixth RespondentMORTGAGE INTERNATIONAL LLPSeventh RespondentEXPRESS FACTORING LLPEighth RespondentWORLDWIDE MODELS LIMITEDNinth RespondentCML BUILDING LIMITEDTenth RespondentSTARDUST BUILDING LIMITEDEleventh RespondentBAYWIDE CREDIT LIMITEDTwelfth RespondentANDERSONS BUILDING LIMITEDThirteenth RespondentUNITEC INVESTMENT LIMITEDFourteenth RespondentKFC LIMITEDFifteenth RespondentWILLIAM CHENG LIMITEDSixteenth RespondentQUEENS HOTEL LIMITEDSeventeenth RespondentWILLIAM CHENGEighteenth RespondentNYIOH CHEW HONGNineteenth RespondentEMILY CHENG aka JOANNE MCKAYTwentieth RespondentWINSTON GEORGE MAURICERAYMOND FRANKLINTwenty first RespondentUNITEC INVESTMENTS LLPTwenty second RespondentHARVEST FACTORING LLPTwenty third RespondentAND WARREN JAMES BORRIEFirst Interested PartyHearing: 13 February – 24 February 2023Appearances: F E Cleary and V M Rea for the ApplicantL C Ord and E T Blincoe for the First RespondentM T Lennard counsel assisting the CourtJudgment: 24 March 2023Reissued: 8 May 2023JUDGMENT OF COOKE J[Publicly available version](Profit forfeiture applications)Table of ContentsBackground [6]Preliminary issues [13]Stance of Mr William Cheng and Ms Nyioh Hong [14]Appointment of counsel assisting [24]Nature of Commissioner's case [28]Claims against Mr Thomas Cheng [39]Methamphetamine offending [45]Statutory presumption [49]Assessment [54]Money laundering [67]Claims against Mr William Cheng and Ms Nyioh Hong [74]Tax evasion [81]Money laundering [88]Benefit from tax evasion [111]The relevant figure [113]The double recovery concern [118]Undertakings [125]Tax Administration Act prevails [133]Property subject to orders [147]Interest through power of attorney [149]Effective control [152]Conclusion [157][1] These proceedings under the Criminal Proceeds (Recovery) Act 2009 (the Act)were first commenced by a without notice application for restraining orders made andgranted in April 2016. By application dated 16 October 2020 the Commissioner nowseeks profit forfeiture orders under s 55 of the Act in the amount of $20,102,053.22 tobe enforced against the property that has been earlier restrained in these proceedings.[2] The primary respondents to the application are Mr Thomas Cheng, who ispresently serving a lengthy sentence for drug dealing, his father Mr William Chengand Mr William Cheng's spouse Ms Nyioh Chew Hong. All three are citizens ofSingapore. They are not citizens or residents of New Zealand. All other respondentsare persons and entities associated with these three persons. Following the completionof his sentence Mr Thomas Cheng will likely be deported back to Singapore.[3] Mr William Cheng and Ms Nyioh Hong live in Singapore. They haveextensive commercial property holdings in New Zealand involving 13 buildings whichhave generated leasehold income. They also have substantial funds in bank accountsthat are associated with these activities. At one point they made an application tobecome New Zealand residents but this was declined.[4] The property that is currently restrained, and which is the target of the profitforfeiture applications, falls into three main categories. The first is money inMr Thomas Cheng's bank accounts and the cash he had at the time of restraint whichinvolves just over $40,000. The second is money in Mr William Cheng's bankaccounts, amounting to approximately $10.4 million at the time of restraint. The finalcategory is the properties that Mr William Cheng and Ms Nyioh Hong own throughother entities said to be worth approximately $10.2 million at the time of restraint.[5] As will be explained Mr Thomas Cheng has engaged in significant drugdealing in New Zealand. It is not alleged that Mr William Cheng or Ms Nyioh Hongwere involved with that. The case against them, and the application for the forfeitureof their assets, is based on allegations of unrelated tax evasion and money laundering.Background[6] Mr William Cheng purchased his first commercial building in New Zealand in1997. This was the Tangata Rite building in Gisborne. Of the properties owned byhis entities in New Zealand this is the most valuable. It has had a number ofgovernment related tenants including Oranga Tamariki and the New Zealand Police.At the time of this first purchase Mr Thomas Cheng would have been only about 14years old.[7] Mr Thomas Cheng had a very troubled childhood. His mother and father areseparated. Ms Nyioh Hong is Mr William Cheng's second spouse.[8] In August 2013 Ms Nyioh Hong applied on behalf of herself, Mr WilliamCheng and their three young children for New Zealand residency. That was declinedin March 2014, and their appeal to the Immigration and Protection Tribunal wasdismissed in May 2015. Over the same period of time Mr William Cheng andMs Nyioh Hong acquired further properties in New Zealand. This began in September2012 through to January 2016 leading to a total portfolio of 13 properties. Theseproperties can be thought of as largely lower grade commercial properties, with someof the buildings having deferred maintenance requirements. One such acquisition wasthe Masonic Hotel in Gisborne which was once a significant hotel, and a buildingwhich still holds heritage value. As will be explained in greater detail below each ofthe properties acquired was owned by a special purpose holding company associatedwith Mr William Cheng and Ms Nyioh Hong.[9] Mr Thomas Cheng came to New Zealand in 2015 at the suggestion of hisfather. It was arranged that he would manage the Masonic Hotel. It operated as aplace for short term tenancies more than a hotel. The arrangement was that Thomaswould be entitled to half the rent from any new tenants that he could find. He arrivedin New Zealand in September 2015, but was arrested on 1 April 2016 formethamphetamine dealing in New Zealand. He pleaded guilty to representativecharges of importing and supplying methamphetamine and was sentenced in theGisborne District Court to 10 years nine months' imprisonment on 22 February 2018.His evidence at the hearing before me was by way of AVL from Tongariro Prison.[10] The applications under the Act followed promptly after Thomas' arrest on1 April 2016. The without notice restraining orders were made by Wylie J on 4 April2016. From the outset the allegations have not only encompassed the allegedmethamphetamine dealing by Mr Thomas Cheng but also alleged tax evasion andassociated offending by his father and stepmother. By judgment dated 28 September2016 Simon France J dismissed an application for restrained funds belonging to hisfather to be released.1 Simon France J noted the allegations of tax evasion, and thebasis for that contention.2 He recorded that Ms Nyioh Hong had attempted to provide1 Commissioner of Police v Cheng [2016] NZHC 2304.2 At [5].some explanation for the business arrangements in evidence given by AVL fromoverseas, but that he did not find her to be a satisfactory witness.3[11] Simon France J also effectively upheld the restraining orders on notice in hisjudgment. The Commissioner made a further application without notice in December2016 to cover nine further properties and nine further bank accounts. They weregranted on notice by Williams J on 1 May 2017. Extensions of the period of restraintwere then granted in 2017 and 2018. On 30 April 2019 the Commissioner madeapplications to extend both orders which were opposed by Mr Thomas Cheng and alsoby Mr William Cheng and Ms Nyioh Hong. This opposition was dismissed by GriceJ by judgment dated 6 November 2019.4[12] At the hearing of the present application the Commissioner applied to extendthe restraining orders and I granted that further extension until 2 June 2023 or earlierorder of the Court.Preliminary issues[13] There are preliminary issues that need to be addressed, some of which are ofimportance to the outcome of the application. To some extent they are interrelated,although I address each in turn.Stance of Mr William Cheng and Ms Nyioh Hong[14] Mr William Cheng is the fifteenth respondent, and Ms Nyioh Hong is thesixteenth respondent. As indicated a sizeable part of the property that is subject to theforfeiture application is beneficially owned by them, including through other entities.It is not alleged that they were involved in, or benefitted from Thomas' drug dealing.Rather it is alleged that they have been involved in their own tax evasion andassociated offending.[15] The involvement of Mr William Cheng and Ms Nyioh Hong, and the questionwhether they were formally opposing the orders has been a matter of ongoing3 At [9].4 Commissioner of Police v Cheng [2019] NZHC 2888.consideration during the course of the proceedings. When the restraint applicationswere first made and served on them they were represented by counsel. Counselappeared on their behalf before Simon France J in September 2016,5 and again whenthe application for an extension of restraint was granted by Grice J in November 2019.6[16] The Commissioner's forfeiture application was then made, and was served oncounsel acting for them. It was set down for a two week hearing on 2 May 2022.Their counsel was granted leave to withdraw on 6 October 2021, however. On11 April 2022 they personally applied for the fixture to be adjourned to allow them toinstruct new counsel. That adjournment was granted and a new fixture set down tocommence on 13 February 2023. A case management conference was then held on18 July 2022. Mallon J heard from Mr William Cheng and Ms Nyioh Hong in lightof their obligation under the timetable to file their evidence by 19 September 2022.Mallon J decided that this still provided them ample time to instruct a lawyer and filetheir opposition. She recorded that counsel then acting for Thomas, Ms Blincoe hadoffered to assist them to find a lawyer.[17] The proceedings were then called again before Gwyn J on 3 October 2022.Mr William Cheng and Ms Nyioh Hong again appeared remotely. They said that theyhad not been served with the forfeiture application. The Commissioner explained thatthe forfeiture application had been served on their previous counsel. Gwyn J acceptedthe application had been properly served but said that " to avoid any doubt that theparties have received all material, Ms Cleary confirms that she will effect electronicservice of all relevant documents on the fifteenth and sixteenth respondents."[18] The proceedings were then called before Isac J on 25 October 2022. He notedthat notwithstanding the further service on Mr William Cheng and Ms Nyioh Hongthey were still unrepresented. He gave further directions to ensure the February fixturewas maintained.[19] I was scheduled to hear the fixture commencing 13 February 2023. On3 January 2023 Mr William Cheng and Ms Nyioh Hong filed a memorandum applying5 Commissioner of Police v Cheng, above n 1.6 Commissioner of Police v Cheng, above n 4.again for the fixture to be adjourned. I convened a telephone conference and heardfrom each of them at some length. They again claimed not to have been provided withthe relevant documents. But I accepted the Commissioner's contention that theforfeiture application had been served again on the sixteenth respondent at an addressthat they had advised, although there was no one present at the address they hadadvised for the fifteenth respondent. I saw no significance in this not only becausethey had already been properly served, but because they both had received the relevantdocuments a second time. They appeared together at the telephone conference. At theFebruary hearing they subsequently watched the proceedings remotely by AVL sittingalongside one another. It is clear that they have received proper service of, and beenfurther provided with the relevant documents.[20] At the telephone conference Mr Lennard, who I subsequently appointed ascounsel assisting, also explained that he had indicated that he was available to beinstructed by Mr William Cheng and Ms Nyioh Hong at an earlier point but that theyhad not done so. I was and am satisfied based on all the information before the Courtthat they have had ample opportunity to instruct counsel, and to comply with thetimetable to allow them to participate at the hearing. I declined the application for anadjournment in these circumstances.[21] I also note that Mr William Cheng and Ms Nyioh Hong asked me to appointan interpreter to assist them at this time. I declined this for two interrelated reasons.First, my interaction with them at the telephone conference, and then again when Iheard from them at the hearing by AVL, demonstrated to me that they had a sufficientgrasp of English to follow and participate in the proceedings. Secondly, this was nota situation where it was appropriate for the Court to appoint an interpreter, and thereis no provision for this in the High Court Rules 2016. That does not preventinterpreters being used under s 80 of the Evidence Act 2006, but that will usually bearranged by the party involved. Here Mr William Cheng and Ms Nyioh Hong werenot actively opposing the applications as they had not filed and served any notice ofopposition or other documents in opposition.[22] As explained, they made no formal appearance at the hearing, but they bothactively watched the proceeding by AVL, and filed further memoranda as mattersarose. I have granted leave for the memoranda to be considered when I haveconsidered it appropriate to do so. But I am satisfied that they have made a decisionnot to actively participate in these proceedings. When Mr Thomas Cheng gaveevidence he was asked by the Commissioner's counsel why they had not done so, andhe explained that it was due to cultural reasons, including the scepticism that they haveof authorities. That may well be the case, at least in part. But they have neverthelessbeen given a fair and complete opportunity to participate, and have previouslyparticipated in the proceedings.[23] Their approach has given rise to the surprising situation where a substantialpart of an application worth in excess of $20 million is not actively opposed by theparties who are the beneficial owners of that property. The Court will obviously actwith care in assessing the application in those circumstances, but I am satisfied thatMr William Cheng and Ms Nyioh Hong have been given a full and fair opportunity toadvance any opposition that they wanted to advance to the Commissioner'sapplications.Appointment of counsel assisting[24] The second matter is related. At the telephone conference on 1 February 2023I also considered a suggestion made by counsel for Mr Thomas Cheng that the Courtappoint counsel to assist the Court given the lack of representation from Mr WilliamCheng and Ms Nyioh Hong, and the issues of principle involved. That suggestion wasopposed by the Commissioner. I asked Mr Lennard, who was suggested as counselassisting, to attend the conference as a consequence.[25] After hearing from counsel and understanding a little more about the case,including that Mr William Cheng and Ms Nyioh Hong were not actively participating,I appointed Mr Lennard as counsel assisting the Court under r 10.22 of the High CourtRules. This course was opposed by the Commissioner on the basis that it wasinappropriate make such an appointment given that Mr William Cheng and Ms NyiohHong had elected not to oppose the Commissioner's applications, and that the Act hadcertain presumptions and other implications in relation to parties who elect not tooppose. I agreed that those considerations were relevant. I address them more fullybelow. But there were two related reasons why the appointment was appropriatenotwithstanding this:(a) First, counsel assisting was not appointed to represent the interests ofMr William Cheng and Ms Nyioh Hong. Rather he was appointed toassist the Court with the issues of principle involved in the application.(b) Furthermore, these issues were of some complexity. I did not acceptthat the submissions from the Commissioner would provide the Courtwith all the assistance that was needed. Whilst there are expectationsin relation to the manner in which the Commissioner pursues litigation,the complexities caused me some concern. I wanted to ensure that theCourt had all the assistance it needed to make appropriate decisions.[26] As it transpired there are a number of issues, particularly in relation to theinteraction between applications by the Commissioner under the Act and the role theCommissioner of Inland Revenue, where Mr Lennard provided substantial assistance,including by providing alternative perspectives that were not put forward by theCommissioner. I have no doubt the appointment of counsel assisting was appropriatein this case in accordance with the principles summarised in Erwood v Holmes.7[27] One of the Commissioner's main concerns was that appointing counselassisting would create a precedent for appointing such persons in future cases. I shouldmake it clear that the appointment was only made in the present case because of itsparticular circumstances. A profit forfeiture application was being made in relation toproperty worth more than $20 million restrained in New Zealand when the beneficialowners were not opposing the application. Those owners were overseas persons. TheInland Revenue Department in New Zealand already had taken significant steps toidentify tax liabilities arising from these amounts. There were complex issuesinvolving the interaction between the profit forfeiture application, and the applicationof the revenue statutes. In those circumstances the Court was applying a conventionalapproach to the appointment of counsel to assist the Court.7 Erwood v Holmes [2017] NZHC 1278, [2017] NZAR 971 at [31]–[38].Nature of Commissioner's case[28] A third preliminary issue arises from the nature of the case advanced by theCommissioner in support of his applications, and the evidence filed in support of it.[29] The Commissioner filed two lengthy affidavits. The first was from WarrenJonson, formerly a Detective in the New Zealand Police, and now Investigator in theAsset Recovery Unit. The second was from Barrie Vevers a chartered accountant inthe Asset Recovery Unit. Neither of them were involved in a way that made themwitnesses to the alleged offending that is subject to the profit forfeiture applications.They are employees in the Asset Recovery Unit of the New Zealand Police. Theiraffidavits described the conclusions they had reached as a consequence of theinvestigations, and the basis upon which they believed the profit forfeiture applicationsshould be granted as sought. Mr Jonson's affidavit was 284 pages long and thenappended lengthy exhibits. Mr Vevers was 104 pages long, again with lengthyexhibits. The application was also said to rely on a large number of affidavits filed insupport of the earlier restraint applications.[30] Much of this evidence appeared inadmissible, or if admissible it was materialof little assistance to the Court. It was in the nature of submission or argument basedon underlying facts that the deponents said were established by underlying events ordocumentation. The underlying material included facts of evidential value, but thecommentary and submission was generally not. Separating out what was evidence offact from submission was not easy, particularly as the witnesses advanced theirarguments at some length, and with some repetition. Neither witness purported to giveexpert evidence, and the Commissioner confirmed that their opinions were not beingprovided to the Court as expert evidence.[31] The response of the Commissioner to these criticisms was twofold. First theCommissioner argued that in Vincent v Commissioner of Police the Court of Appealheld that latitude was appropriate with the admissibility of evidence filed in supportof applications under the Act, including by allowing police officers and others to setout the results of the investigations in opinion form.8 This involves a8 Vincent v Commissioner of Police [2013] NZCA 412.misunderstanding of what the Court of Appeal held. The Court explained thatapplications under the Act were originating applications under Part 19 of the HighCourt Rules, and that r 19.10(1) provided that rr 7.29 and 7.30 applied.9 Rule 7.29brought across rr 9.75–9.88 governing affidavits. Rule 7.30 then provides:7.30 Statements of belief in affidavits(1) A Judge may accept statements of belief in an affidavit in which thegrounds for the belief are given if—(a) the interests of no other party can be affected by the application;or(b) the application concerns a routine matter; or(c) it is in the interests of justice.[32] The Court held that the admissibility of police officer opinion evidence fell tobe determined under this rule in the manner contemplated by s 20 of the Evidence Act2006. The Court said:10By way of explanation, restraining orders will often need to be obtained insituations of urgency, as is illustrated by the provision for "without notice"applications. They are, as we have said, temporary orders, which give thepolice time to gather further evidence, and may lead to forfeiture but only onthe completion of further processes. Restraining orders are issued on the basisof reasonable grounds to believe, rather than proof, that the target hasunlawfully benefitted from significant criminal activity. This means, in ourview, that affidavits such as those filed by the two police officers areadmissible, without the need for a formal application under s 19 of theEvidence Act. Rather, they fall within r 7.30 of the High Court Rules and s 20of the Evidence Act. The alternative to allowing what are, technically at least,hearsay statements in affidavits such as those at issue would be to require avery elaborate evidentiary basis for the issue of restraining orders, whichwould be impractical and inconsistent with the approach taken in othercontexts. We note that the same approach has been taken in other jurisdictionswhich have legislation similar to the Act.[33] But as the Court said, and as subsequent decisions of this Court have alsoexplained,11 that is because at the restraint stage the question for the Court is whether9 At [45](c).10 At [47] (footnotes omitted).11 Commissioner of Police v Smith [2017] NZHC 10 at [10]; Commissioner of Police v Irwin [2020]NZHC 1370 at [49]–[50]; Commissioner of Police v Rae [2020] NZHC 3132 at [24]–[25];Commissioner of Police v Clarke [2021] NZHC 1981 at [4].there are reasonable grounds to believe that the basis to make restraining orders exist.Proof of the allegations is not required. They are interim orders. For that reason theopinions of the investigating officers are not only admissible, but directly relevant towhat the Court must decide. Such evidence is admissible in accordance withr 7.30(1)(c) of the High Court Rules and s 20(2) of the Evidence Act.[34] But that is not so at the forfeiture stage. At the forfeiture stage theCommissioner must prove the elements that must be established for forfeiture, albeiton the civil standard of the balance of probabilities. Under s 55 of the Act theCommissioner must satisfy the Court, on the balance of probabilities, that therespondent has unlawfully benefitted from significant criminal activity, and therespondent has interests in the property subject to the application. There arerequirements under other provisions. At the restraint stage the Commissioner does notneed to prove this, he only needs to establish that there are reasonable grounds tobelieve that the basis to make restraining orders exists. This is an important distinctionthat needs to be understood by the Commissioner when pursuing forfeitureapplications. The kind of evidence in support of a forfeiture application will likely beof a different kind from the evidence filed in support of restraint applications. Thisforfeiture application is a civil proceeding in which the Commissioner is effectivelyseeking judgment for over $20 million. The kind of evidence one might expect tosupport such a claim in civil proceedings needs to be presented.[35] If a respondent has pleaded guilty to charges that amount to significant criminalactivity the records of that conviction are admissible under s 47(3)(b) of the EvidenceAct. The summary of facts agreed to between the prosecution and defence can bereceived in evidence in proceedings under the Act.12 The Commissioner may not needto lead other evidence proving the offending in those circumstances. The position willbe more complex when a respondent has been found guilty of the offending at a trial.13Here Mr Thomas Cheng pleaded guilty to offending, and within the Commissioner'svoluminous evidence were documents providing evidence of this. He also acceptedthis when he gave evidence and when submissions were advanced on his behalf. The12 See Commissioner of Police v McLean [2022] NZHC 2634 at [15]; Commissioner of Police vWisely [2020] NZHC 2941 at [34]; Commissioner of Police v Slessor [2022] NZHC 3511 at [35].13 The conviction would still be admissible under s 47(3) and it has been held that findings made atsentencing are also admissible – Police v Filer [2013] NZHC 3111 at [30]–[31].position is more difficult for the allegations concerning Mr William Cheng andMs Nyioh Hong as no charges have been brought, so the Commissioner needs to provethe significant criminal activity by other admissible evidence. For the reasons outlinedbelow I accept that there is documentation in the exhibits that does so.[36] The Commissioner's second response to the criticism of the evidence filed wasthat no objection to the Commissioner's evidence on the basis of hearsay had beentaken as required by r 9.11 of the High Court Rules. Reference was made toCommissioner of New Zealand Police v Drake where the Court noted the importanceof identifying admissibility issues well in advance of hearings so that parties could beprepared for such matters and appropriate steps could be taken.14[37] The short point response to this argument is that r 9.11 of the High Court Rulesdoes not apply to evidence filed in support of originating applications under Part 19.Rule 19.10 specifies what other rules apply to originating applications. Rule19.10(1)(i) provides that the rules governing affidavits in r 7.9, and accordinglyrr 9.75–9.88 are applicable. That does not include r 9.11. That is not to say that partiesshould not signal well in advance of a hearing any admissibility concerns in a Part 19proceeding as the Court said in Drake. A party taking the other by surprise at thehearing is unlikely to be treated sympathetically. But the Commissioner has anobligation to file only admissible evidence in support of an application in accordancewith r 9.76(1)(d)(i) which does expressly apply to Part 19 applications. Theadmissibility issue here was also not a confined one. It affected much of the evidencewhich had been provided in support of the application.[38] In any event the issue was not one of formal admissibility, but what evidencewas substantially helpful to the Court. No formal objection to admissibility was taken,and I have not made a ruling in that respect.Claims against Mr Thomas Cheng[39] I begin with the application against Mr Thomas Cheng, involving his offendingand his property. The applications are for profit forfeiture orders under s 55 of the Act.14 Commissioner of New Zealand Police v Drake [2017] NZHC 2919.They do not involve any application for assets forfeiture of tainted property under s 49,or instrument forfeiture order in accordance with s 70.[40] A profit forfeiture order under s 55 involves the following elements:(a) The Commissioner must prove that significant criminal activity (asdefined by s 6) took place in the specified period.(b) The Commissioner must prove that the respondent unlawfullybenefitted, directly or indirectly, from that significant criminal activity.(c) The value of that benefit must be determined in accordance with ss 52–53.(d) The Commissioner must prove that the respondent has interests inproperty to be disposed of under s 83 to satisfy the order.[41] The standard of proof on the Commissioner is the balance of probabilities.There are other steps that may arise in relation to relief against forfeiture, but they donot arise in the present case.15 There is no application for relief against forfeiture. Iaddress below the requirement that the order identify the property against which theorder is to be executed.16[42] I accept that the Commissioner has satisfied the burden in relation to the firsttwo elements here. I note that the Commissioner's application did not particularisethe relevant allegations, however. The application simply identified a relevant period,and a total benefit of $20,102,053.22 applicable to all the respondents, alleging thatthe significant criminal activity was " the sale and supply of the Class A controlleddrug methamphetamine, money laundering, tax evasion and criminal deception".During the hearing the Commissioner confirmed that no allegation of "criminaldeception" was maintained. In any event this is not an offence. The allegation of taxevasion was not advanced in relation to Mr Thomas Cheng. Similarly the allegations15 See Pulman v Commissioner of Police HC Auckland CIV-2010-404-5666, 27 May 2011 at [10]–[13].16 See [147] to [156] below.involving sale and supply of methamphetamine were not advanced against Mr WilliamCheng and Ms Nyioh Hong. Allegations of money laundering were made against allof them but in relation to separate alleged activities.[43] So the Commissioner's allegations were grouped together withoutparticularity. Neither was there any identification of what methamphetamineoffending was alleged to have occurred in the notice of application. An applicationfor a profit forfeiture order under Part 19 of the High Court Rules does not require astatement of claim, but the application should particularise each of the matters thatestablish the elements that entitle the Commissioner to the orders against each relevantrespondent. That was not done in the present case.[44] In opening the Commissioner identified that of the amounts subject to theallegations in relation to Mr Thomas Cheng's drug offending was $512,852, and thatthis benefit arose from two police operations, Operation Province and Operation Joust.It also identified that the Commissioner's money laundering allegation againstThomas Cheng involving "structured cash deposits" of $98,520. Separate moneylaundering allegations are made in relation to Mr William Cheng, Ms Nyioh Hong andthe entities with whom they are related. They will be addressed below.Methamphetamine offending[45] I deal first with the forfeiture arising from the alleged methamphetamineoffending. I accept that Mr Thomas Cheng unlawfully benefitted from significantcriminal offending as defined by s 6, namely the importation and supply ofmethamphetamine. He was convicted of one representative charge of importingmethamphetamine, and one representative charge of supplying methamphetamine. Hewas sentenced to 10 years nine months' imprisonment on 22 February 2018.17 Heunsuccessfully appealed that sentence.18 The summary of facts which was agreed toby both the Crown and Mr Thomas Cheng for the purpose of the guilty plea and thesubsequent sentencing stated as follows:17 R v Cheng [2018] NZDC 3344.18 Cheng v R [2021] NZCA 68.On 5 December 2015 the defendant, who is a Singaporean national, arrived inNew Zealand and moved into the Masonic Building in Gisborne.The defendant arranged for an associate, Mohamed Faizal Bin Abdul Hamed,to import methamphetamine into New Zealand. Hamed arrived intoNew Zealand from Singapore on 24 December 2015 with six ounces (168grams) of methamphetamine. The defendant picked him up from the AucklandInternational Airport and the two travelled to Gisborne with themethamphetamine.The defendant subsequently sold the six ounces of methamphetamine to retailpurchasers in Gisborne.Included in these sales were three sales to an undercover officer. The first saleto the undercover officer was of 0.67 grams for $600 on 3 February 2016. Thesecond sale was of 1.15 grams for $1,000 on 4 February 2016. The third salewas of 1.09 grams for $1,000, also on 4 February 2016. That last payment waslater made to the defendant's bank account.The following day, on 5 February 2016, the defendant returned to Singapore.While in Singapore he arranged for another associate, Joo Cher Suriya Sim,to bring methamphetamine into New Zealand. Sim was to carry themethamphetamine and the defendant was to accompany him on the flight.Sim and the defendant travelled to New Zealand on 19 March 2016. Sim wascarrying 306 grams (10.9 ounces) of methamphetamine. Sim was searched atthe airport and the methamphetamine was located. Sim was arrested. Thedefendant was not stopped and travelled to Rotorua.While staying in Rotorua the defendant arranged for two Singaporeannationals, Denise Ryan and Mohamad'Nazjib Abdul-Majit, to import furthermethamphetamine into New Zealand. The defendant agreed to pay each ofthem $5,000 for their roles.On 1 April 2016 Ryan and Abdul-Majit travelled to New Zealand fromSingapore. They were searched and Abdul-Majit was found to be carrying 100grams (3.5 ounces) of methamphetamine.The defendant had travelled to Auckland International Airport to meet themand he was arrested by the Police. The defendant was interviewed by thePolice and admitted the offending.In total the defendant imported 574 grams of methamphetamine intoNew Zealand of which 168 grams were distributed into the market and 406grams were intercepted.[46] The summary of facts is a reliable record, agreed to by both the prosecutionand the defendant, in relation to this offending. It amounts to an admission byMr Thomas Cheng. I accept the facts as described.[47] In terms of quantifying Mr Thomas Cheng's unlawful benefit theCommissioner's case was straightforward. The total benefit derived from the unlawfulimportation of 574 grams of methamphetamine was calculated by reference to theaverage price of the sales to undercover police officers, being $893.47 per gram asdescribed in the summary of facts, resulting in a total of $512,852.[48] Counsel for Mr Thomas Cheng criticised this calculation in two main ways.First it was said that this average price of the sale to undercover officers was not theappropriate price to use given other evidence, including evidence given by Mr ThomasCheng himself on what the sale value of methamphetamine per gram was. Second,the agreed summary of facts recorded 406 grams of the drugs so imported wereintercepted at the border, and only 168 grams was actually received by Mr Cheng andable to be sold by him. Mr Cheng could not have profited from drugs that wereintercepted. Even using the Commissioner's average price the benefit could be nomore than $150,102.96.Statutory presumption[49] Both points raise an issue about the calculation of the benefit derived fromsignificant criminal activity under the provisions of the Act. Section 52 requires theCommissioner to calculate and state the benefit from the significant criminal activityfrom which a respondent has unlawfully benefitted. Section 53 then provides thatwhen the Commissioner proves on the balance of probabilities that the respondent hasso benefitted, the value of the benefit is presumed to be as alleged, but that thepresumption may be rebutted by the respondent on the balance of probabilities. Thesestatutory provisions recognise that it will frequently be difficult for the Commissionerto know precisely what benefit is derived by a person from significant criminalactivity. The provisions allow the Commissioner to identify the proposed benefit withthe burden then shifting onto the respondent to prove some other benefit. As the Courtof Appeal explained in Cheah v Commissioner of Police:19The purpose of the reverse onus was discussed in the Explanatory Note to theCriminal Proceeds (Recovery) Bill 2007 in the following way:20The Crown will not be required to establish the value of the profitderived from significant criminal activity, as this would be tooonerous a test. Rather, the onus will be on the respondent to an order19 Cheah v Commissioner of Police [2020] NZCA 253 at [28].20 Criminal Proceeds (Recovery) Bill 2007 (81-1) (explanatory note) at 3.to establish, on the balance of probabilities, that the value specified inthe application is too great.The justification for this reverse onus is the difficulty of obtainingevidence showing the unlawful origins of property, as against theexpectation that if property is derived from lawful activity the ownershould be able to establish that.[50] In interpreting and applying these provisions the Court will wish to see that thepurpose of the provisions is fulfilled. As Cooke P said of the Act's legislativepredecessor, such legislation is intended to deter serious crime by demonstratingemphatically that it does not pay.21 At the same time, however, its purpose is not topunish offenders a second time. That would be particularly so given s 26(2) of theNew Zealand Bill of Rights Act 1990. The presumption should only be interpretedand applied in a way that ensures the respondent has not benefitted from the activity,not to punish them. The exclusion of the ability to rely on any costs incurred in thecriminal enterprise under s 56(3) has a similar objective. The provisions should beinterpreted and applied in that spirit.22[51] For that reason a respondent cannot simply critique aspects of theCommissioner's calculation methodology.23 The respondent will know what thebenefit was and have access to witnesses and records that may be needed to providethis whereas the Commissioner does not.24 It is reasonable to expect the respondentto establish that a lower figure is more accurate.[52] The ability of the respondent to prove some other benefit gives protectionagainst the application going beyond a reasonable calculation of the benefit obtainedby a respondent by the offending. In addition the fact that the Commissioner isrequired to prove, on the balance of probabilities, that the respondent has unlawfullybenefitted is a significant evidential hurdle.25 Moreover as Ellis J said inCommissioner of Police v Keen, the Commissioner is not permitted to choose a randomfigure in the application as this would be an arbitrary and wrongful exercise of21 R v Pedersen [1995] 2 NZLR 386 at 391.22 Cheah v Commissioner of Police, above n 19, at [24]–[35].23 Commissioner of Police v Tang [2013] NZHC 1750 at [39].24 Commissioner of Police v Filer, above n 13, at [13].25 Cheah v Commissioner of Police, above n 19, at [44].statutory power.26 The Court has the power under s 47 to amend the application for acivil forfeiture order, and "whether the Court then deals with the matter by amendingthe application under s 47 (as suggested by the Court in Cheah) or by making its ownassessment based on the evidence as a whole, will depend on the circumstances of thecase".27 I agree that these are important safeguards against executive overreach.28[53] I will assess the two areas of dispute against the above background.Assessment[54] First, Mr Thomas Cheng did not accept the prices that were used in theCommissioner's calculations. He gave evidence that he normally soldmethamphetamine for between $400 and $600 per gram. There is some evidence ofother transactions, or proposed transactions at this kind of price. He said that theundercover police officers simply proposed a price higher than his market price.[55] I do not accept Mr Cheng's evidence proves a lower value is appropriate. Thesales to the undercover police officers did in fact occur at these prices. Moreover theCommissioner produced national market data on the prices per gram at the time.Between November 2015 and January 2016 a typical price was identified as between$650 and $850 per gram, with a lower limit of $350 and an upper limit of $1,200.Between February 2016 and August 2016 the typical price was $600 per gram, thelower limit $400 per gram and the upper limit of $1,200 per gram. This datademonstrates that the prices for the sale to the undercover officers were within thetypical ranges of sale price.[56] Moreover Mr Cheng's evidence was reasonably carefully presented, andinvolved a focus on a criticism of the Commissioner's calculations. He did not purportto give detailed evidence of the methamphetamine sales he had actually engaged in. Iaccept that one of the reasons he could not do so is that information of his sales waspotentially on his cell phones, and that these were seized by the police andsubsequently lost by them. But Mr Cheng nevertheless was not able to, or did not give26 Commissioner of Police v Keen [2020] NZHC 3365 at [13].27 At [13].28 Snowden v Commissioner of Police [2021] NZCA 336 at [49].detailed evidence of his actual sales. The fact that he would depend so heavily on hiscell phones for information is a reflection of the nature of drug dealing operations.The fact the police lost his phones does not mean that he has satisfied the burden.[57] For these reasons I accept that the presumption has not been displaced inrelation to the price to be used in assessing the benefit Mr Thomas Cheng derived.[58] There is an issue arising from the second point raised by Mr Thomas Cheng.The Commissioner's calculations of the quantities of methamphetamine used for thecalculation of the benefit include methamphetamine that Mr Cheng never received.The summary of facts was not just agreed to by Mr Thomas Cheng, but it was alsoagreed to by the Crown. It unambiguously records that 406 grams of the 574 wereintercepted. The benefit that Mr Cheng derived from his drug dealing cannot includedrugs he never had.29[59] But the Commissioner's evidence was that Mr Cheng's drug dealing involvedadditional quantities of methamphetamine. I discount some of the evidence reliedupon by the Commissioner, such as what Mr Thomas Cheng said in interviews andconversations which are filled with exaggeration and are otherwise unreliable. But hisfirst convictions involved representative charges. Moreover the evidence proves thatMr Thomas Cheng engaged in yet further drug dealing from prison after he had beenconvicted and imprisoned. This was the further offending identified by OperationDory. This operation led to Mr Thomas Cheng pleading guilty to a further eightcharges on 17 June 2022. He was sentenced to a further two years and nine months'imprisonment after benefiting from a series of discounts.30[60] I gave leave for the Commissioner to produce the summary of facts and relateddocuments leading to those convictions. It had not been included in theCommissioner's lengthy affidavits. This second summary of facts is itself lengthy.The Crown's sentencing submissions summarised the drug offences agreed to in thefollowing terms:29 See Commissioner of Police v McDonald [2019] NZHC 1089 at [46]–[47].30 R v Cheng [2022] NZDC 11309.(a) Importing — six occasions, 282.5 grams quantified (on two occasions)and unknown quantities involving the overseas transfer of NZD42,777.61 (on four occasions).(b) Possession for supply — two occasions, 85.5 grams.(c) Offering to supply — two occasions, 91 grams.(d) Supplying — 11 occasions, 156 grams (on nine occasions) andunknown quantities on two occasions.[61] In closing the parties advanced argument on what conclusions on the quantitiesand prices could be drawn from the summary of facts. There is uncertainty about theparticular quantities involved. It is not clear whether the quantities involved in theimporting and supplying involve the same drugs, or how various quantities involvedin importing, possession, offering and supplying related to each other. The summaryof facts is also not clear on the price that would be applicable to particular quantities.It referred to some occasions where prices were involved, but that there is nocomprehensive recording of what the quantities and price of quantities actually were.[62] In those circumstances it would be an artificial exercise for the Court to reachconclusions from the summary as to quantities, and the prices to be used for thosequantities, for the purposes of an alternative calculation of the benefit derived byMr Thomas Cheng. The summary of facts is just that — a summary. The actual factsare known to Mr Thomas Cheng. He disagreed with the summary in evidence, but hedid not give evidence in detail explaining the details of his further offending toestablish an alternative basis to calculate his benefit. To some extent that may bebecause the Commissioner's application was initially not clearly based upon it. Butsuch evidence could still have been given.[63] The Commissioner did not apply to amend the forfeiture application based onthe further evidence that I allowed him to produce. So the Court must deal with theapplication as it stands. I have no basis upon which to direct an amended application.As the authorities make clear, when it is established that a respondent has benefittedfrom significant criminal offending the respondent cannot simply sit back and critiquethe Commissioner's calculation of that benefit. It is presumed to be as theCommissioner has alleged unless and until the respondent rebuts the presumption,subject only to situations where the Court can, and should require an amendedapplication to be filed and served. I conclude that the evidence of this furtheroffending means that Mr Thomas Cheng has not rebutted the presumption that thevalue of his benefit is as stated in the Commissioner's application in accordance withs 53 of the Act. A potential problem with the Commissioner's calculation arises fromthe fact that the Crown and Mr Cheng agreed that 406 grams of the 574 grams subjectto the first offending was intercepted. But the evidence shows there was additionaloffending, including as evidenced by the summary of facts agreed between the Crownand Mr Thomas Cheng for the subsequent charges involves a further (at least) 615grams. The gap is filled.[64] In the absence of clear evidence rebutting the presumption the amount statedin the Commissioner's application must be accepted in those circumstances. Theprices received for this further offending might possibly have been lower, and not allof this volume of methamphetamine may have been sold by Mr Thomas Cheng. Inthe absence of detailed and persuasive evidence from him outlining his offending Iaccept the figure in the Commissioner's application. It may be that this amount isunlikely to be the actual amount of the benefit derived by Mr Thomas Cheng, but hehas failed to displace the presumed benefit. The statutory response to the inherentdifficulty for the Crown in calculating the benefit offenders actually receive foroffending such as significant drug dealing must be applied.[65] For these reasons I uphold the Commissioner's application in the amount of$512,852.[66] I note at this point that the disputes I have just addressed may turn out to bemoot. The value of Mr Thomas Cheng's property that has been restrained andavailable to meet any forfeiture order is only just over $40,000. On his release fromprison he will likely be deported so his life in New Zealand will be over. So aforfeiture order for a higher amount will only be of significance if the Commissionerpersuades me that the order can be enforced against the property of his father,stepmother and their entities, a matter I address below.Money laundering[67] A second part of the Commissioner's allegations against Mr Thomas Cheng isthat he has engaged in money laundering. The Commissioner seeks forfeiture of acalculated benefit of $98,520 attributed to what is described as "structured cashdeposits". The Commissioner alleges that this amount is forfeit because it involvedthe offence of money laundering in contravention of s 243 of the Crimes Act 1961.[68] Mr Thomas Cheng was not convicted of money laundering. But theCommissioner produced evidence that a total of $98,520 was deposited byMr Thomas Cheng into his bank account. That involved 52 cash deposits of amountsinvolving $2,500 or less, with the majority being deposits of $1,000. There were oneor two higher amounts deposited. In addition the Commissioner refers to the fact thatsome funds from this account were transferred by Mr Thomas Cheng into a savingsaccount (approximately $30,000) and in amounts totalling approximately $40,000were also transferred by Mr Thomas Cheng out of this account to the accounts ofMr William Cheng.[69] I explain the elements of money laundering in greater detail below at [89]–[91]. I accept that the Commissioner may be able to establish an offence of moneylaundering in relation to these deposits and transfers. But I make no finding to thateffect given my ultimate conclusion, explained below, that there was no benefitderived from any money laundering.[70] I accept that, on the balance of probabilities, a substantial source of the depositswas Mr Cheng's methamphetamine dealing even if some of those deposits occurredbefore the alleged drug dealing. Mr Cheng explained that he also received smallamounts by way of cash for his business operations in connection with the MasonicHotel, but I nevertheless accept that the banking of small cash amounts of this kind islikely to have been substantially contributed to by his drug dealing operation. It isthen a question of fact whether the dealings with that money involve concealmentsatisfying the further elements for money laundering. Sometimes the simple act ofconverting cash into a balance in a bank account could amount to money laundering.31That is because it converts cash obtained from drug dealing transactions into anapparently legitimate form involving a balance in a bank account. Drug dealers oftenneed to find ways of converting large quantities of cash received from sales into amore legitimate form. And here the cash received was combined with other sourcesof legitimate income, and then the funds went through additional transactions in thefinancial system involving transfers into another account, and transfers to anotherperson's account (in this case that of his father, Mr William Cheng).[71] But even accepting that such steps satisfy the concealment element of moneylaundering offending I do not accept that the Commissioner has proved, even on thebalance of probabilities, that Mr Thomas Cheng unlawfully benefitted from suchoffending in accordance with the broad definition contained in s 7. I have alreadyaccepted the Commissioner's application in relation to the benefit derived from thedrug dealing offending itself. I have upheld the Commissioner's application for aprofit forfeiture order in the amount of $512,852. The deposits in issue here are thedeposits of the money derived from the sale of those drugs. Even allowing for somespending of cash by Mr Thomas Cheng, which is reflected in the $11,542.84 cashseized from him on arrest, the fact that the Commissioner's analysis of Mr ThomasCheng's bank accounts shows that he banked only $98,520 suggests that the award of$512,852 already strips Mr Cheng of any benefit derived from his offending. TheCommissioner's application should not double-count a benefit that has already beenidentified and made subject to an order.[72] Furthermore I do not accept that the Commissioner has established thatMr Cheng benefitted from any such money laundering by itself. He plainly benefittedfrom the drug dealing that generated the funds, but he did not additionally benefit fromany concealment involved in the alleged laundering of those funds.[73] For these reasons I decline the Commissioner's application in relation to thestructured deposits.31 R v Wilson [2022] NZHC 1901 at [13]–[15].Claims against Mr William Cheng and Ms Nyioh Hong[74] The more significant part of the Commissioner's forfeiture application seeksorders against Mr William Cheng, Ms Nyioh Hong, and the entities with which theyare associated. As I have already explained none of these respondents appeared todefend the Commissioner's application, although Mr Cheng and Ms Nyioh Hongobserved the hearing and they filed memoranda responding to issues that arose.[75] I have already commented on the way in which the Commissioner's allegationswere grouped together in an unclear way. The Commissioner's allegations weresweeping, and suggested overall offending committed by "the Cheng group". For thereasons that will be explained in greater detail below, there is ultimately only twocategories of offending relevantly involved, however — drug dealing by Mr ThomasCheng, and tax evasion by Mr William Cheng and Ms Nyioh Hong.[76] The application in relation to Thomas Cheng's drug offending, and allegedmoney laundering sought profit forfeiture orders of $512,852 and $98,520. Thebalance of the Commissioner's contention for profit forfeiture orders, totalling over$20 million, relates to Mr William Cheng, Ms Nyioh Hong and the entities with whichthey are associated. This was broken down to comprise claims in relation toundeclared commercial rental income totalling $5,721,145.98, off-shore remittancesinto New Zealand totalling $13,249,330.08 and interest earned on New Zealandfacilities of $520,205.16.[77] The notice of application, evidence and opening submissions of theCommissioner referred to " money laundering, tax evasion and criminal deception".As the hearing progressed, however, it was accepted by counsel for the Commissionerthat "criminal deception" was not significant criminal activity as defined by s 6 of theAct. Indeed it was accepted that no offence of this general description was alleged aspart of the application. It was explained that the reference to criminal deception wasprovided by way of context for the Commissioner's overall case.[78] It follows that the analysis for the Commissioner's somewhat loosely identifiedcase against Mr William Cheng, Ms Nyioh Hong, and their entities is based onallegations of tax evasion and money laundering. I am unable to identify any othersignificant criminal offending that could be relevant to the application as it affectsthem. I do not apprehend the Commissioner alleges that Mr William Cheng andMs Nyioh Hong were in any way involved in Mr Thomas Cheng's drug offending, andin any case there is no basis for the allegation.[79] The factual basis for the Commissioner's claims in this respect arise from thefact that entities associated with Mr William Cheng first acquired a commercialproperty in New Zealand in 1997. A further 12 commercial properties were acquiredover the years, with the last property so acquired in January 2016. Money was remittedfrom Singapore into New Zealand bank accounts for the purpose of the propertyacquisitions. Leasehold income was earned from the properties and banked intoMr William Cheng's bank accounts in New Zealand. Money was then remittedoffshore, and remitted into New Zealand from and to that account in the periodbetween 2012 and 2016. A total of $13,249,330.08 was sent inwards, and a total of$2,447,165 was remitted outwards. A total of $9,838,000 was used to purchase the 13properties. The balance in Mr William Cheng's bank account at the time of restraintwas just over $10 million. These essential facts are the starting point for theCommissioner's contentions that an amount of $20 million is forfeit to the Crown asa benefit derived from its substantial criminal offending.[80] I deal with each of the categories of alleged significant criminal activity in turn.Tax evasion[81] Pursuant to s 143(1)(b) of the Tax Administration Act 1994 a person commitsan offence if they do not provide information, including tax returns, when required todo so by tax law. Under ss 143A(1)(b) and 143B(1)(b) it is an offence to knowinglynot provide such information.[82] In terms of the rental income that is at the centre of the Commissioner'sallegations, the commercial properties beneficially owned by Mr William Cheng (andMs Nyioh Hong) were each held by a separate legal entity. Leases were not alwaysentered in relation to this rental income earned from such properties, but it would bethe legal owner of the property who would be obliged to pay both income tax, andgoods and services tax on the rental income and file the relevant returns. Having saidthat it is apparent that each of these legal entities were vehicles for Mr William Chengand Ms Nyioh Hong, and that these entities were operated and controlled by them.[83] There have been no charges of tax evasion in contravention of these provisionsagainst Mr William Cheng, Ms Nyioh Hong or any of the entities. But I accept thatthe Commissioner has proved, on the balance of probabilities, that there has been taxevasion committed in relation to the entities associated with each of the propertiesthrough a knowing failure to pay income tax, and goods and services tax on the rentalincome, and in the failure to file income tax returns and goods and services tax returnsin that connection.[84] Under s 143A(8) as well as s 143B(4) such offending involves a maximumpenalty of imprisonment for a term not exceeding five years, a fine not exceeding$50,000, or both. So such offending constitutes a significant criminal activity for thepurposes of the Act.32[85] The Commissioner produced in evidence the Inland Revenue Department(IRD) default assessments in relation to undeclared income tax and GST tax arisingfrom the rental income, and GST obligations involving a tax liability of $1,679,246.33An IRD memorandum accompanying the assessment states:Mr Cheng appears to have intentionally filed nil returns for some periods. Hefailed to return rental income for GST and INC tax for a span of approximately10 years to date.Mr Cheng's failure to return and pay tax on the rental income appears to bedeliberate and a wilful attempt to evade tax.The rental properties are registered under Mr Cheng's various entitieshowever the bank account where the rental income is deposited is not in anyof the entities' names. The set-up appears to be for the purposes ofconcealment of the rental income to evade the assessment of tax.[86] I accept that these documents are admissible under s 18 of the Evidence Actnotwithstanding that they are hearsay. As a formal record the statement provides areasonable assurance that it is reliable. The maker of the statement is unavailable as awitness given the confidentiality provisions of the Tax Administration Act.32 Commissioner of Police v Drake, above n 14, [86]; Commissioner of Police v Nabawi [2021]NZHC 2413.[87] For these reasons I accept that the Commissioner has proved that there wassignificant criminal activity arising by a failure to declare income tax and goods andservices tax lawfully.33Money laundering[88] The Commissioner's allegations of money laundering are more complex. TheCommissioner's money laundering allegations are of real practical significance. Asidentified above the established tax evasion involves evading tax in the amount ofapproximately $1.6 million. Yet the Commissioner seeks forfeiture of amountsexceeding $20 million. The Commissioner argues that this much higher amount issubject to forfeiture because of the alleged money laundering.[89] Section 243 of the Crimes Act relevantly provides:243 Money laundering(1) For the purposes of this section and sections 243A, 244 and 245,—conceal, in relation to property, means to conceal or disguise theproperty; and includes, 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 inany manner 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, wherever33 Two of Mr William Cheng's entities were also apparently prosecuted by IRD in 2006 and fined$5,200, albeit that the records of this offending were not made available.committed, that would be an offence in New Zealand if committed inNew Zealandproceeds, in relation to an offence, means any property that is derivedor realised, directly or indirectly, by any person from the commissionof the offence(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.(3) Subject to sections 244 and 245, every one is liable to imprisonmentfor a term not exceeding 5 years who obtains or has in his or herpossession any property (being property that is the proceeds of anoffence committed by another person)—(a) with intent to engage in a money laundering transaction inrespect of that property; and(b) knowing or believing that all or part of the property is theproceeds of an offence, or being reckless as to whether or notthe property 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 the propertywas the proceeds of another offence.[90] In the current circumstances the relevant elements of money laundering are:34(a) There must be conduct that is recognised as offending underNew Zealand law. That does not require proof of a particular offence,or that the respondent was the offender.(b) There must be proceeds of such offending.35(c) The defendant must know, believe or be reckless as to whether theproceeds are proceeds of offending.(d) The person must deal, or assist a person dealing with the proceeds byconcealing, or enabling a person to conceal them as defined.[91] These requirements should be addressed with the purposes of making moneylaundering an offence in mind, including that overseas persons should not seeNew Zealand as a haven to deposit the proceeds of crime.36[92] There was considerable uncertainty arising from the Commissioner's case onthe first two elements. The Commissioner's case was very broadly based. Hecontended that all of the inwards remissions of funds into New Zealand by Mr WilliamCheng were the proceeds of offending. Ultimately, however, the only offending thatthe Commissioner actually identified was the New Zealand tax evasion referred toabove. There was more general reference to wrongdoing in Singapore. For examplea judgment of the Singaporean High Court,37 and then the Singaporean Court ofAppeal38 was referred to where Mr William Cheng was found liable formisrepresentation in relation to a property sale in Singapore in 2011. This resulted injudgment against him in the amount of S$179,410.89. The two Singaporean34 R v Allison [2006] 1 NZLR 721 (CA) at [28]; Rodriguez v Commissioner of Police [2020] NZCA589 at [24]; Commissioner of Police v Rae, above n 11, at [29].35 The provision refers to "property" as defined, but under s 243(2) and (3) the property must be"proceeds of an offence".36 Rodriguez v Commissioner of Police, above n 34, at [26].37 Su Ah Tee and others v Allister Lim and Thrumurgan and another [2014] SGHC 159.38 Cheng William v Allister Lim and Thrumurgan and another [2015] SGCA 15.judgments were exhibits to the affidavit of Mr Jonson. The Commissioner argued thatunder ss 256, 257 and 228 of the Crimes Act 1961 the use of forged documents wasan offence, and that the judgments evidenced such offending.[93] Overseas offending can qualify if the conduct is an offence in New Zealand,and the conduct is an offence at the place it took place.39 But it was not establishedthat the funds remitted inwards into New Zealand were the proceeds of thiswrongdoing. In any event the findings of the Singaporean Courts were simply thatMr William Cheng was involved in misrepresentation, not an offence. Moreover,whether such judgments could be admitted to establish the proof of the findings maynot be clear given s 50 of the Evidence Act.[94] No other clear evidence of offending in Singapore, or elsewhere, was putforward by the Commissioner to form the basis for a contention that the inwardremittances of funds were the proceeds of such offending. The Commissioner referredto some "circumstantial evidence" to suggest other offending in Singapore,particularly tax evasion,40 but this material could not be taken to have proved any suchoffending, or that the inwards remission of funds were the proceeds of such offending.The Commissioner relied on Immigration New Zealand's "finding" that the fundsnominated for the residence application had been earned or acquired legally, but thatdoes not prove either offending, or proceeds of offending even if the "findings" wereadmissible evidence on such matters. Neither was it suggested that the inwards flowof funds could be said to have been the proceeds of the New Zealand tax evasion.[95] I also note that there was also some evidence led that Mr William Cheng wasnot honest in his dealings with other people. It is notable that his email address was"sirwilliamcheng@yahoo.com". Mr Cheng does not have a knighthood. Mr Jonsonalso gave evidence that Mr William Cheng told him that he had been a High CourtJudge in Singapore. That is something that might have been remarked upon by theChief Justice of Singapore when increasing the civil judgment against Mr Cheng formisrepresentation had it been true.41 This kind of evidence, whilst intriguing, does not39 See s 245 and Rae v Commissioner of Police, above n 11 at [28]–[29].40 One document suggests that Mr William Cheng had low taxable income in Singapore in 2010 wasreferred to, but it was unclear what, if anything, could be drawn from that.41 Cheng William v Allister Lim and Thrumurgan and another, above n 38.establish any elements of the offence of money laundering. Equally theCommissioner's allegation that statements made to Immigration New Zealand on aresidency application were dishonest does not advance the case for orders under theAct.[96] Under cross-examination both Mr Jonson and Mr Vevers repeatedly referredto the suspicious nature of the dealings by what they described as the Cheng group,and that Mr William Cheng and Ms Nyioh Hong had failed to provide any explanationor information to dispel the suspicions. I accept that adverse inferences can be drawn,particularly when a respondent does not provide such information, or defend theapplication.42 But it is still necessary for the Commissioner to prove, albeit only onthe balance of probabilities, the elements required for a forfeiture order, including thatthere has been significant criminal activity from which the respondent has benefitted,and for the offence of money laundering that there were proceeds of offending thatwere then laundered.[97] For these reasons the only relevant offending that has been established for thepurpose of the alleged money laundering offence is tax evasion in New Zealand.[98] It must then be proved that there were "proceeds" of tax evasion that werelaundered. Here I do not accept that the Commissioner has proved that any amountsin Mr William Cheng's accounts were the "proceeds" of the commission of thatoffence. There is no money that is "property that is derived or realised, directly orindirectly, by any person from the commission of the offence".43 The gross rentalpayments were not the proceeds of tax evasion. The obligation to pay income tax, andto pay GST, arose subsequently, and consequentially when the income was soreceived. It is then a legal obligation to file returns in relation to that income, and topay the tax assessed on it that is independent of those proceeds. None of the proceedsare themselves derived from such evasion.42 Commissioner of Police v de Wys [2016] NZCA 634 at [9]–[10] and [71].43 Crimes Act, s 243(1).[99] For that reason I do not accept that this element of the money launderingoffence is established. The Commissioner's contention that there was moneylaundering in contravention of s 243 of the Crimes Act accordingly fails.[100] In any event, even if I had accepted that the gross rental income was, at leastin part, the proceeds of offending I do not accept that the Commissioner hasestablished that Mr William Cheng concealed those proceeds in the manner defined ins 243(1). I accept that even quite ordinary transactions can qualify as concealment.When drug dealers use cash received to buy items of property that can qualify.44 Butall that happened here was that Mr William Cheng received the proceeds into his bankaccount where they largely accumulated. Some funds were transferred out of thataccount, but much larger amounts were transferred into it. At the time when theaccounts were restrained the balance of that account exceeded $10 million, well inexcess of the unpaid tax liability.[101] The Commissioner contended that there was nevertheless concealment asdefined. First, the money was paid into Mr William Cheng's personal bank account,and not to the legal entities who owned the buildings, and who therefore had the taxliability. But I do not accept that this would conceal or disguise the nature, source,location, disposition or ownership of the property, or convert it from one form toanother in accordance with the definition of "conceal". Mr William Cheng was thereal beneficiary of this income, and the payment of the income into his personalaccount in a New Zealand bank exposed rather than concealed this.[102] The Commissioner relied on a number of other steps taken in relation to themoney in this account. Money was paid out to Mr Thomas Cheng as part of anallowance, money was remitted to and from Singapore, payments were made forpurchases of property and other similar transactions took place. Engaging in suchtransactions can involve a concealment that is part of money laundering particularlywhen funds are combined with other legitimate sources of income. But given that thefunds in this account largely accumulated, that the Singapore transfers increased ratherthan decreased the amounts in the account, and that the other transactions did not44 See R v Wilson, above n 31, at [13]–[15].involve any dissipation of funds in any meaningful sense, I do not accept that thisinvolves action that objectively amounts to concealment.[103] I accept that there was artificiality, and therefore potential deception involvedin the legal structure that had been created. Each of the commercial properties wasowned by a separate legal entity, and there was then a separate mortgage registeredagainst the titles of the properties in favour of a further legal entity associated withMr William Cheng. This was usually Mortgage International LLP. The fact that boththe property owning entity and the mortgagees were associated with Mr WilliamCheng was apparent from a search of the publicly available registers, however.Nevertheless the use of these entities assisted Mr William Cheng and Ms Nyioh Hongto assert (falsely) that any tax liability was offset by costs of financing by financecompanies, including the restraint stage before Simon France J.45[104] But this artificial legal structure, which has the hallmarks of tax evasion, wasnot deployed to conceal or disguise the nature, source, location, disposition orownership of any proceeds which is the essence of money laundering. The artificialstructure was not used for any money flows. The proceeds simply sat in Mr WilliamCheng's personal bank account where they largely accumulated. I do not accept thatthis involved concealment.[105] Part of the concept involved in money laundering is reflected in the definitionof "conceal". In paragraph (a) it refers to converting property from one form toanother. In paragraph (b) it refers to a number of steps that "conceal or disguise" trueownership or interest in the property. Although not expressly referred to, one of theconcepts inherent in these definitions, and of the offence, is the dissipation of thefunds. Money laundering involves concealing the illegitimate source of funds throughvarious steps that disguise where it has come from, to allow the offender(s) to reap therewards of the initial offending. If funds simply sit in the personal bank account ofthe principal offender, at a trading bank, in an account in his own name, it is verydifficult to see that he is engaging in money laundering.45 Above n 1.[106] For these reasons, even if I had accepted that the money transferred intoMr William Cheng's bank account were the proceeds of an offence, I would not haveaccepted that there was any concealing of the proceeds to satisfy the requirements ofthe money laundering offence under s 243. For that additional reason theCommissioner's allegations of money laundering fail.[107] Although it is not necessary to go further, it is appropriate to address a furthersignificant aspect of the Commissioner's case. The Commissioner argued that, whilstthe tax evasion benefit was only approximately $1.6 million, the alleged moneylaundering would involve a benefit of over $20 million to be made subject of theforfeiture order. On the face of it that is a surprising contention. The Commissionerargued, however, that where money laundering was involved the benefit to theoffender is the availability of the funds laundered, even when no material increase inwealth occurs. In Rodriguez v Commissioner of Police the Court of Appeal referredto the words "directly or indirectly" in s 7 of the Act, and said that this was indicativeof a need to take a "broad and robust approach" to fulfilling the statutory purpose.46The Court agreed with the approach of Toogood J in Solicitor-General v Beckhamwhere he held:47 When an offender launders the proceeds of his or her crime, he or shereceives a benefit through the concealment of the source of the proceeds inorder to make it seem that those proceeds were derived from a legitimatesource. Such a benefit accrues each time that money is laundered, even if thesame sum is processed a number of times. That benefit can be quantified asthe value of the proceeds laundered at each stage; the laundering enables theoffender to use those proceeds freely without arousing suspicion, which wouldnot otherwise have been possible. While this conclusion may appear toproduce a harsh outcome, I am satisfied the Solicitor-General's approach isthe one that is the most consistent with the punitive nature of the pecuniarypenalty orders under the legislation.[108] This judgment was under the preceding legislation, the Proceeds of Crime Act1991. That Act had more of a punitive aspect as Toogood J expressly stated.48 I acceptthat the provisions of the present Act, and the establishment of the elements of moneylaundering can lead to this result — in the words of the Court of Appeal in Rodriguez46 Rodriguez v Commissioner of Police, above n 34, at [49].47 Solicitor-General v Beckham [2015] NZHC 2816 at [61].48 Also stating at [11] that that Act was " designed to serve the purposes of punishment anddeterrence, and should be applied as a penal statute"." the availability of funds without any increase could be classified as a benefit".49But that does not mean that this is always so as a matter of law. Whether that benefitis derived in any particular case is still a matter of fact to be assessed in light of thecircumstances.[109] Here I do not accept that, even if $1.6 million was the proceeds of unlawfulactivity within the meaning of s 243 of the Crimes Act, and those funds had beenconcealed by being banked into Mr William Cheng's bank account, that this meansthat the full amount of approximately $10 million in that account is forfeit, let alonethe further properties worth approximately $10 million that were acquired byMr William Cheng from funds in that account. As a matter of fact that benefit wouldnot have been derived from the receipt of unlawful proceeds, and the concealing ofthose proceeds. The Commissioner's magic result would not arise as a matter of fact.The benefit derived from the tax evasion would still simply be from the unpaid tax of$1.6 million, together with any interest to reflect the time value of money, even if itwas concealed and therefore the detection of the offending impeded.[110] The above findings mean that the only relevant offending proved by theCommissioner in relation to Mr William Cheng and Ms Nyioh Hong is tax evasion.Benefit from tax evasion[111] To obtain a profit forfeiture order under s 55 of the Act the Commissioner mustprove the respondent unlawfully benefitted from significant criminal activity. Thevalue of that benefit must then be determined in accordance with ss 52 and 53. TheCommissioner has established that Mr William Cheng, Ms Nyioh Hong and/or theentities with which they are associated committed tax evasion. What benefit from taxevasion has the Commissioner then proved?[112] On the face of it the answer seems obvious. The benefit is the $1.6 million taxthat was not paid. It would not be the Commissioner's figure in the application inexcess of $20 million. On that basis this would be a case where the Court would beobliged to exercise its power to require the Commissioner's application to be amended49 At [49], emphasis added.to the lower figure.50 But there were a series of issues that emerged during the hearingin relation to this suggested benefit, and the calculation of the benefit which necessitatefurther consideration.The relevant figure[113] The first point was that I questioned Ms Cleary on whether the $1.6 millionwould understate the benefit derived from the significant criminal activity. That isbecause the tax liabilities would have arisen some time ago, and Mr WilliamCheng/Ms Nyioh Hong/their entities would have had the benefit of the unpaid taxduring that period. Normally one might address this by including an award of interestin the calculation of the benefit to reflect the time value of money. But Ms Clearyindicated that the Commissioner did not wish to include any such calculation as partof the profit forfeiture application.[114] The next point was that it emerged during the questioning of theCommissioner's witnesses that there had been some engagement between Mr WilliamCheng/Ms Nyioh Hong/their entities and the IRD, and some arrangements entered forthe payment of tax. This caused me some concern, particularly if such arrangementsinvolved payments to address the arrears. For that reason I invited the Commissionerto seek documentation from the IRD under s 98 of the Act — a provision that appliesnotwithstanding the secrecy normally arising under s 18 of the Tax Administration Act— so that the position could be clarified.[115] The Commissioner then filed a second supplementary affidavit of Mr Jonsonsworn 16 February 2023 in accordance with leave that I gave. In it Mr Jonson advisedthat IRD had told him that the entities that had not paid tax had not made any paymentson tax owed up to 31 March 2017, although no documents to show that were produced.Mr Jonson also said that the entities were now making payments towards their taxobligations from 31 March 2017. Mr Jonson's affidavit also explained what thecurrent tax liability arising from the unpaid $1.6 million now was. The total liabilityis now said to be $11,443,457.37. The ballooning out of the amount due is aconsequence of the penalty and default interest provisions under the Tax50 See [52] above.Administration Act. They are well-known to have a swinging effect when tax is notpaid when due, particularly if no steps are taken to address that liability, as appears tobe the case. I accept this evidence under s 18 of the Evidence Act given that directevidence from the IRD is not available given the effect of s 18 of the TaxAdministration Act.[116] When this affidavit was filed the Commissioner confirmed that he was notseeking to claim that the benefit from the tax evasion subject to the application wasnow $11,443,457.37. The Commissioner still maintained the benefit from the taxevasion was $1.6 million, with no increase for interest. I accept that that is anappropriate stance. The difference between the $1.6 million and the $11.4 million isa consequence of what can be described as penalties, albeit that it includes an interestcomponent. It is not a benefit derived from the offending itself. It is a penalty facedby the offender for their tax evasion.[117] What these developments illustrated, however, was a difficulty, or mismatchbetween the Commissioner's application for a profit forfeiture order based on taxevasion, and the Commissioner of Inland Revenue's processes for recovering the taxnot due. The issue for the Court then became how to reconcile these inconsistencies.This gives rise to the further points of principle which were addressed by counselassisting.The double recovery concern[118] The essential issue these points raise is that there are two parallel processes forrecovery of unpaid tax — profit forfeiture by the police, and enforcement by the IRD.On the face of it both apply, and there is a risk of double recovery.[119] This problem has been addressed by two previous High Court decisions. InCommissioner of Police v Nabawi, Duffy J confirmed that tax evasion could be asignificant criminal activity for the purposes of forfeiture applications under the Act.5151 Commissioner of Police v Nabawi, above n 32.But she also addressed factors which she observed had not been directly touched onby the parties before her. She said:52 tax evasion does not cause the tax liability under the [Tax AdministrationAct] to evaporate; it merely avoids it. A tax evader will only profit from theoffence if he or she is successful in avoiding detection. Once the offence isdetected, absent any statutory bar against recovery, the benefits derived fromthe offending may be cancelled out by actions taken by the IRD under the [TaxAdministration Act]. The existence of live tax liabilities may mean that profitsderived from tax evasion are more notional than real. Whilst a tax evader mayhave enjoyed the extra disposable income tax evasion has brought him or her,such profits will sit alongside the tax liability he or she continues to owe.When the tax liability is enforced it may expunge what appeared beforehandto be profits from tax evasion. On the other hand, if the additional disposableincome derived from tax evasion is used to acquire assets that rapidly inflatein value, the resulting profits may survive the effect of any tax recovery by theIRD.I was not informed regarding Mr Nabawi's tax situation with the IRD andwhether the IRD was taking steps to recover unpaid tax that he may owe. Iconsider it would have been helpful if the Commissioner had obtainedevidence from the IRD on those matters. If the IRD takes no steps, then forthe reasons I have already given I consider there are reasonable grounds tobelieve Mr Nabawi has profited from tax evasion. On the other hand, recoveryaction by the IRD may wipe out any profits the evasion has provided.[120] The issues were then further addressed in Li v Commissioner of Police.53 Thiscase included allegations of tax evasion. After initial restraint orders were made theCourt subsequently approved a settlement under s 95 of the Act. An issue thenemerged over whether the amount agreed to be paid under the settlement should havebeen applied to the outstanding tax liability. Proceedings were then brought under theDeclaratory Judgments Act 1908 to deal with that issue. Wylie J resolved the questionby interpreting the settlement agreement, and finding that the parties to it did not intendthe funds to be forfeited would be applied to tax liabilities.54 Wylie J went on to say,however:55I am alive to the overarching concerns expressed by Ms Lanham. While I donot accept her argument that the property forfeited in this case was based onany agreement as to the quantum of the unlawful benefit, or that the unlawfulbenefit related primarily to unpaid tax, I am more sympathetic to hersubmission that there is a fundamental unfairness. As a result of what hasoccurred, Mr Li has been denied the benefit of either paying the tax andoffsetting the amount against the benefit said to have been derived from52 At [53]–[54].53 Li v Commissioner of Police [2022] NZHC 514.54 At [80].55 At [104].significant criminal activity for the purposes of the CPRA proceedings, orhaving the funds the subject of the assets forfeiture order credited against hissubsequent assessed tax liability.[121] Wylie J then set out the observations of Duffy J and said:56Ms Lanham's concerns, and those expressed by Duffy J, are implicitlyfounded in the doctrine that the Crown is a single entity, that the variousgovernment departments comprising the Crown are but elements of that entity,and that the Crown is one and indivisible.57 This doctrine, it seems to me, isrelevant to the issue of double recovery. The Crown is the ultimate beneficiaryof any monies disgorged by Mr Li, Ms Wang and AA Taxation, whether byway of forfeiture under the CPRA or by way of the payment of tax under thevarious Inland Revenue Acts.[122] Wylie J also then referred to the authorities from England and Wales which hadalso addressed this point which I will briefly refer to below.[123] The present case squarely raises these questions. That is because the onlysignificant criminal activity involved in the claim against Mr William Cheng,Ms Nyioh Hong and their entities is tax evasion. There is no other offending involved.There are substantial assets in New Zealand, including over $10 million inNew Zealand trading bank accounts available to the IRD to satisfy the unpaid taxliability. Default assessments have been issued. The Commissioner seeks profitforfeiture of $1.6 million for the alleged benefit from the evasion in reliance on thedefault assessment, but the Commissioner of Inland Revenue presently seeks over$11.4 million for the same tax evasion. As will be explained below the Commissionerof Inland Revenue has extensive powers to effectively confiscate the monies in theNew Zealand bank accounts to recover what is due. The question of double recoveryis plainly a live one.[124] In the course of the hearing two solutions were raised to the double recoveryissue, the first raised by the Court, and the second raised by counsel assisting. I willaddress each in turn.56 At [108].57 Town Investments Ltd v Department of the Environment [1978] AC 359 (HL) at 400;Commissioner of Inland Revenue v Medical Council of New Zealand [1997] 2 NZLR 297 (CA) at327; and Ministry of Fisheries v Vu [2010] NZCA 469, [2011] NZAR 114 at [38].Undertakings[125] The first approach arose at the Court's suggestion, and has been adopted by theCommissioner. When this issue emerged at the hearing I raised the possibility of theCommissioner of Police and the Commissioner of Inland Revenue filing a jointmemorandum to the effect that the amount that would be forfeit in these proceedingswould be applied to the outstanding tax liability.[126] After I had raised that possibility I heard from counsel assisting who suggestedthat this approach would not be consistent with the provisions in the Act. Havingconsidered his points in a preliminary way I could see that that might be the case, butI still gave leave to the Commissioner to file a joint memorandum with theCommissioner of Inland Revenue along the above lines. Mr William Cheng andMs Nyioh Hong filed a further memorandum objecting to this approach which I havetaken into account.[127] The joint memorandum then filed recorded that the IRD had taken no recoveryaction in respect of the unpaid tax, and that it was considered that the currentrestraining orders prevented such steps being taken. It advised that if forfeiture wasnot ordered the Commissioner of Inland Revenue would consider the recovery powersunder Part 10 of the Tax Administration Act, which will include the powers I refer tobelow. The joint memorandum further advised that the Commissioner of Police wouldconsent to the Official Assignee making payment to the Commissioner of InlandRevenue in accordance with the operation of s 83 of the Act. The joint memorandumalso said that, should payment be made to the Commissioner of Inland Revenue, theCommissioner would apply that sum to reduce the outstanding tax owed.[128] The potential problem with this approach was identified by counsel assisting.Profit forfeiture orders are made under s 55. That section is prescriptive. The ordermust specify the value of the benefit to be obtained under s 53, the maximumrecoverable amount under s 54, and the property that is to be disposed of under s 83.Under s 55(4) the order is enforceable as an order made as a result of civil proceedingsinstituted by the Crown against the person to recover a debt due to it, with themaximum recoverable amount recoverable from the respondent by the OfficialAssignee on behalf of the Crown as a debt due to the Crown. Then under s 83 theOfficial Assignee is directed to take steps with the forfeit property in accordance withthat section, including by making the priority payments under s 83(1) such as thepayment of the Official Assignee's costs, and the repayment of any legal aid paymentsmade for the respondent.[129] The difficulty is that these provisions do not contemplate the Official Assigneeproviding funds to the Commissioner of Inland Revenue to meet the respondent's taxliabilities. Neither is there any clear power of the Court to direct the Official Assigneeto do so. Such a direction would effectively be that the Official Assignee must payamounts to the Commissioner of Inland Revenue, who is to receive and apply thefunds for the benefit of the relevant respondent. Whilst the Commissioner of Policehas indicated he consents to the Official Assignee making a payment to theCommissioner of Inland Revenue, and the Commissioner of Inland Revenue hasindicated that if it receives such funds it will apply it against the tax due, there is noexpress statutory machinery that provides for this.[130] The Commissioner argued that such a direction would fall within s 59(1)(b) asa direction that is necessary or convenient for giving effect to the civil forfeiture order.But I have some doubts about that. Section 55(4) makes it plain that the Court's ordercreates a new debt. Section 83 dictates how forfeit funds are to be dealt with. Iquestion whether the power to give directions under s 59(1)(b) can be utilised toeffectively override the effect of these provisions.[131] I refrain from concluding, however, that this avenue could never be applied.The risk of double recovery is a significant one, in the absence of any other techniqueto interpret or apply the Act in a manner that avoids that risk, this route may benecessary. The circumstances of future cases may mean that this would be anappropriate way forward.[132] I have given consideration to the point made by Wylie J in Li that the Crownis a single entity.58 But that concept does not avoid the fact that legislative provisionscreate separate requirements that must be adhered to by the different representatives58 Li v Commissioner of Police, above n 53, at [108].of the Crown involved. Sections 55 and 83 prescribe what must happen to the propertythat is subject to the order, and the fact that the Crown is notionally a single entity doesnot avoid the impact of these provisions.Tax Administration Act prevails[133] The alternative approach was advanced by counsel assisting. It has tworelevant aspects. The first is that in cases where the Commissioner of Inland Revenueremains able to recover the unpaid tax, and clearly has the ability to do so in relationto New Zealand assets, as a matter of fact the respondent has not benefitted from thetax evasion. Indeed, given the extensive powers the Commissioner of Inland Revenue,including the penalty provisions, such a respondent is in a "world of grief".59Secondly, the provisions of the Act allow the Commissioner of Inland Revenue toapply for relief against restraint, and relief against forfeiture, to allow for recovery ofthe tax due. That approach would be most appropriate in more borderline cases.[134] Under s 157 of the Tax Administration Act the Commissioner of InlandRevenue has a power to issue a notice to require any person to deduct or extract a sumthat is equal to the amount payable by the taxpayer from any funds, and pay the sumto the Commissioner. That means, for example, that the Commissioner can direct abank to pay it money from an account of a defaulting taxpayer to meet the amount oftax due. That power could be exercised here in relation to the more than $10 millionin Mr William Cheng's bank accounts. The Commissioner has not yet exercised suchpowers. The joint memorandum explains that that has not occurred because of therestraint orders made by the Court under the Act. But even if the judgment is releaseddismissing the Commissioner's application for a profit forfeiture order againstMr William Cheng, Ms Nyioh Hong and their entities, the Commissioner of InlandRevenue remains able to exercise such powers. The judgment dismissing theapplication will not dismiss the orders restraining those accounts. Under s 38 therestraining orders remain in place for seven working days from the date of the decision,and if an appeal is lodged the restraint remains in place until the withdrawal ordetermination of that appeal.59 Commissioner of Police v Snook [2018] NZHC 2537 at [59].[135] I am satisfied, therefore, that the Commissioner of Inland Revenue retains aneffective ability to recover the outstanding tax debt as well as the penalties fromMr William Cheng's account.[136] In those circumstances it seems to me that the Court is in the situation describedby Duffy J in Nabawi where " recovery action by the IRD may wipe out any profitsthe evasion has provided".60 As Ellis J said in Commissioner of Police v Snook insimilar circumstances:61 as the term suggests, profit forfeiture orders are concerned with "profit"which, like "benefit", connotes a gain or surplus. The purpose of such an orderis 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 also be interpreted in that context and in that light.[137] I accept Mr Lennard's arguments in this respect. Mr William Cheng,Ms Nyioh Hong and the entities are not better off as a result of their tax evasion. Theyare, in Ellis J's words, in a "world of grief". The allegation that they have benefittedis not established as a matter of fact. The Commissioner of Inland Revenue is nowseeking $11.4 million arising from the initial $1.6 million unpaid, and has access tobank accounts holding over $10 million which are presently restrained, but which willbe available to the IRD as soon as this judgment is released.[138] It may be observed that the wrongdoing of Mr William Cheng, Ms Nyioh Hongand their entities is ultimately naïve. Their tenants were paying rent, and were nodoubt declaring that they were doing so in their own income tax and GST returns.Those proceeds were then simply going into Mr William Cheng's New Zealand bankaccount over a period of some 10 years where they sat largely accumulating in theaccount. It is close to inevitable that the authorities would catch up with the failure tofile returns and pay tax in those circumstances. The fact that the proceeds remainedavailable for recovery by the authorities ultimately demonstrates that Mr WilliamCheng and Ms Nyioh Hong are not sophisticated wrongdoers. In any event, in thecircumstances of this case, the IRD should now simply be allowed to take enforcementaction to regularise the position.60 Commissioner of Police v Nabawi, above n 32, at [54].61 Commissioner of Police v Snook, above n 59, at [63], emphasis added in original..[139] I am not suggesting that the above approach will be appropriate in all caseswhich have elements of tax evasion. But in the present case where the onlysubstantiated allegation against these respondents is tax evasion, and theCommissioner of Inland Revenue is now perfectly placed to take effectiveenforcement action, I do not accept that it has been proved that on the balance ofprobabilities that the respondents have benefitted from the significant criminalactivities.[140] There may be cases where the issue is more complex, and where tax evasion ismixed in with other serious offending. But in those situations I accept Mr Lennard'ssubmissions that the provisions of the Act can be interpreted and administered in away that makes this Act, and the Tax Administration Act work in the way thatParliament must have intended. That is generally the approach that should be adoptedin the interpretation of overlapping statutes.62 Mr Lennard argued that theCommissioner of Inland Revenue could apply for relief against forfeiture under s 61of the Act so that certain funds are not subject to forfeiture. The Commissioner ofInland Revenue could also apply at the restraint stage for a variation of the restraintorders under s 35 to allow funds to be released to meet tax payable. Mr Lennardargued that the Commissioner should be served in accordance with s 21 in s 45 in caseswhere the Commissioner of Inland Revenue has an interest in the property subject toproposed orders. That approach to the above provisions also has the advantage thatthe Commissioner of Inland Revenue's applications would involve carrying into effectthe revenue laws in accordance with the exceptions to the secrecy provided by the TaxAdministration Act under s 18B. So the Commissioner could fully explain the positionand affidavit evidence before the Court as Duffy J identified was appropriate inNabawi.63[141] The Commissioner argued that the statute did not work in this way because theCommissioner of Inland Revenue would not have an "interest in the property" subjectto the applications for restraint and forfeiture as required. I do not accept that. Thedefinition of interest in s 5 is:62 See Burrows and Carter Statute Law in New Zealand (6th ed, LexisNexis, Wellington, 2021) atp 613.63 Commissioner of Police v Nabawi, above n 32, at [54].interest, in relation to property of any kind (including, without limitation,restrained property or forfeited property), means—(a) a legal or equitable estate or interest in the property; or(b) a right, power, or privilege in connection with the property[142] The powers that the Commissioner has to direct that funds in an account beseparated from that account and paid to the Commissioner to meet a taxpayer's taxliability under s 157 of the Tax Administration Act falls within the definition of a "rightor power" in connection with that property under paragraph (b) of the definition. Ifthe power had actually been exercised it would be clear that an interest had arisen, andit may be that the power could be exercised at the same time as the relief application,or that the IRD could explain its proposal to exercise the power so that its interest inthe property could be identified.[143] The use of provisions in this way may well be appropriate in more complexcases where the alleged significant criminal activity encompasses other offending aswell as tax offending, including applications in relation to tainted property. They thenallow the procedures of the Act to work, and the Court to make judicial decisions onwhat property, if any, is to be separated out to meet taxation liabilities.[144] The double recovery issue has arisen in other jurisdictions which have regimesfor criminal profit forfeiture. In R v Waya the United Kingdom Supreme Courtaddressed the double recovery issue.64 In delivering the majority judgment (withwhich the minority did not disagree on this point) Lord Walker and Hughes LJ said:65 HM Revenue and Customs does not as a matter of practice seek doublerecovery by way of both the payment of the unpaid duty and a confiscationorder in the same sum: see R v Edwards [200] 2 Cr App Rep (S) 160, paras24–25, where the existence of this practice was the reason why no breach ofA1P1 was argued. This practice is to be followed, it appears, because suchdouble recovery is recognised to be disproportionate and wrong. On theprinciple explained above, the argument may need in the future to beconsidered that a disproportionate result should not be left to be achieved byway of Executive concession but rather should be the responsibility of theCourt to which an application for a confiscation order is made.64 R v Waya [2012] UKSC 51, [2013] 1 AC 294.65 At [33].[145] The provisions in the UK legislation are different. But the point still applies.It is more appropriate that there be judicial determination of any double recoveryquestion, rather than the matter being resolved by executive agreement, and the filingof a joint memorandum by counsel for the Commissioner of Police, and counsel forthe Commissioner of Inland Revenue.[146] For all the above reasons I accept that this is a better approach to addressingthe double recovery issue.Property subject to orders[147] Once the Commissioner has proved significant criminal activity, that therespondent benefitted from it, and the value of that benefit has been calculated underss 52 and 53 there are further steps. The Court must determine the maximumrecoverable amount under s 54. This involves deducting the value of any assetsforfeited by an assets forfeiture order. No such assets were forfeited in the presentcase. Then under s 55 the Court must make a profit forfeiture order by specifying therelevant amounts, and then specify the property in which the respondent has, or istreated as having, an interest, which is to be disposed of to meet the amount to beforfeit. The Official Assignee then disposes of that property in accordance with s 83.[148] On the face of it there is limited property of Mr Thomas Cheng to meet theprofit forfeiture order in the amount of $512,852. The value of the funds in the bankaccounts which were subject to restraint are a little over $40,000 together with anyinterest that has been earnt on those amounts since restraint. He has no otherNew Zealand assets, he is presently in prison, and will no doubt be deported toSingapore once released. But the Commissioner alleges that the forfeiture order canbe satisfied from the substantial assets of Mr William Cheng, Ms Nyioh Hong, andtheir entities. The Commissioner advances that argument in two ways.Interest through power of attorney[149] The Commissioner must prove, on the balance of probabilities, that therelevant respondent has an interest in the relevant property under s 55(1)(b). TheCommissioner contends that Mr Thomas Cheng has an interest in the property inaccordance with the definition of "interest" set out at paragraph [141] above becausehe held a power of attorney for Mr William Cheng, to be exercised when Mr WilliamCheng did not have capacity.[150] I do not accept this argument establishes an interest for two reasons. First, Ido not accept that Mr William Cheng lacked capacity such that the power of attorneywas activated. The condition required for the interest to arise was not satisfied.Mr William Cheng apparently has health issues, and there have been statements fromMr William Cheng, and Ms Nyioh Hong to the effect that Mr William Cheng suffersfrom conditions that affect his capacity. This included Ms Nyioh Hong producing amedical report in April 2013 saying that Mr William Cheng was "dysfunctioning".But I am not satisfied that he was incapacitated so that Mr Thomas Cheng's authorityarose. When Ms Nyioh Hong and Mr William Cheng participated in telephoneconferences and by way of AVL before me, Mr William Cheng spoke and advancedarticulate submissions. His submissions, and the manner in which they weredelivered, did not suggest a lack of mental capacity of a kind that would suggest hedid not have capacity to deal with his personal affairs. Mr Thomas Cheng gaveevidence about the circumstances leading to him holding the power of attorney. I treathis evidence with some care — Thomas is an intelligent and articulate person with adegree of personal charisma, but he is not reliable. I nevertheless accept he gavetruthful evidence about this matter. He has had a very troubled life, and a troubledrelationship with his father. He became overcome with emotion when giving evidencedescribing his reaction to his father's health concerns at the time, and the request thathe be his attorney. I accept his evidence about this power of attorney, including thathe never utilised it. I am not satisfied that Mr Thomas Cheng had interests in theproperty for that reason.[151] Secondly, the definition of "interest" does not contemplate a situation when aperson is exercising a role under a power of attorney because the property owningdonor is incapacitated. The definition of "interest" captures situations where theperson has a form of beneficial interest such that the property is to be treated as theirown, or partly their own. For an attorney to treat the property of the incapacitatedperson for their own benefit would be a flagrant breach of their obligations. To say atrustee has an interest in the property of the beneficiaries would be clearly unjust.66That is not to suggest that a person who is a trustee of property may not be found tohave an interest in that property for the purposes of the Act. Each case will depend onits circumstances. But I do not accept that a person holding a power of attorney,enabling them to step in when a person who has become mentally or physicallyincapacitated and cannot manage their affairs, obtains a personal interest in thatperson's property so that it is liable to be forfeit for the wrongdoing of the attorney.Effective control[152] The second argument for the Commissioner was based on a broader review ofthe circumstances. The Commissioner contended that Mr Thomas Cheng had effectivecontrol of the property of his father, stepmother and their entities. That was notinitially advanced as part of the application, but I gave leave to the Commissioner tofile an application for effective control order under s 58 of the Act. Whether it waseffectively served on Mr William Cheng and Ms Nyioh Hong may be an openquestion. Under s 58(1) if the Court is satisfied that a respondent has effective controlover property it may be treated as though the respondent has an interest in the property.The general approach under this provision involves the Court considering the practicalreality of ownership rather than being limited to legal form.67 The fundamentalquestion is whether, as a matter of fact, the respondent had the capacity to control, use,dispose of, or otherwise treat the property as his or her own.68 Unlike other provisionsin the Act the burden of proof is not specified — the Court just needs to be so"satisfied". But it seems clear that this will be the same standard as referred toelsewhere. The Commissioner would need to establish this on the balance ofprobabilities. If granted this would mean that Mr Thomas Cheng would be treated ashaving an interest in this property allowing a forfeiture order to be made against himin relation to it.[153] I do not accept that the evidence shows that Mr Thomas Cheng had effectivecontrol of this property, or any material part of it. It is true that he was appointed66 Commissioner of Police v Briggs [2012] NZHC 2324 at [68].67 Commissioner of Police v Read [2015] NZHC 2055 at [60]; Solicitor-General v Bartlett [2008] 1NZLR 87 (HC) at [27].68 Commissioner of Police v Jiang [2020] NZHC 695, [2021] 2 NZLR 272 at [43].partner of some of the entities, and that he also acted as the property manager of theMasonic Hotel and the nearby Redoubt building. He performed other tasks for hisparents when they needed to be done by someone in New Zealand. For example henegotiated the purchase of another property in Gisborne. There is other morecircumstantial, or peripheral evidence the Commissioner relied upon. These mattersdo not establish that he had any control, or interest in a real or beneficial sense,however. I do not accept that some of the things Mr Thomas Cheng said about whathe owned is reliable. I am satisfied from the evidence that the true position is thatMr William Cheng and Ms Nyioh Hong kept their property separate from Mr ThomasCheng, and that they were quite careful in relation to what they allocated to him. Forexample I accept Mr Thomas Cheng's evidence that they paid him an allowance for aperiod.[154] Thomas Cheng's family life was plainly not straightforward, and therelationship with his father and stepmother has been difficult. I accept that Mr WilliamCheng would have liked his son to become involved in his business activities, andultimately take them over. But it simply did not work out that way. His father arrangedfor him to come to New Zealand and made an arrangement with him in relation to newtenants at the Masonic Hotel. But Thomas gave evidence that he did not think he wasbeing given enough, and he started not only deriving additional amounts from thisarrangement behind his father's back, but also resumed drug dealing. He was arrestedwithin a year of coming to New Zealand. The risk of this kind of behaviour was whatled his parents to be careful with what they gave him. He plainly did not have effectivecontrol of his father and stepmother's wealth.[155] The Commissioner relied on the earlier decision of Grice J in support of theirarguments in this respect. But all that Grice J found was that, at the restraint stage,given that Thomas held his father's power of attorney and had connections with therestrained property there was sufficient evidence that he had an interest in or right ofprivilege in connection with the property.69 She did no more than identify an arguablecase for the purposes of restraint. Having now considered the more comprehensive69 Commissioner of Police v Cheng, above n 4, at [51].evidence I am satisfied that he did not have an interest as defined, or as contemplatedby s 58.[156] Given the above findings I make the following formal orders:(a) The value of the benefit determined under s 53, and the maximumrecoverable amount under s 54 against Mr Thomas Cheng is $512,852.(b) The property that is to be disposed of in accordance with s 83(1) is:(i) All the funds contained in the Westpac bank account in the nameof Mr Thomas Cheng.(ii) All the funds contained in the Westpac bank account in the nameof Mr Thomas Cheng.(iii) All the money held in the account in the name of Mr ThomasCheng and the interested party Grace Yei Huey Fan.(iv) All the money in the Westpac Bank New Zealand Police TrustAccount deposit Eastern Account representing cash seized fromMr Thomas Cheng at the time of his arrest, plus any interestearned on that amount.Conclusion[157] For the above reasons I uphold the profit forfeiture orders in relation toMr Thomas Cheng, and make the order referred to in [156] above. I otherwise dismissthe applications.[158] This means that applications seeking profit forfeiture orders over propertyworth in excess of $20 million has resulted in an order in relation to only one of therespondents for $512,852 where there appears to be property worth only a little over$40,000 to satisfy the order.[159] Much of the Commissioner's application was based on grouping together anumber of matters concerning Mr Thomas Cheng, Mr William Cheng, and Ms NyiohHong. Mr Thomas Cheng engaged in significant drug dealing activities, andMr William Cheng and Ms Nyioh Hong also engaged in tax evasion. This issignificant offending reflected in Mr Thomas Cheng's lengthy prison sentences, andsizeable tax liability now faced by Mr William Cheng, Ms Nyioh Hong and theirentities. But I have rejected the idea that there was a much greater criminal enterpriseinvolving what the Commissioner has described as the Cheng Group. Moreover noneof the offending the Commissioner has identified is sophisticated. In the case ofMr William Cheng and Ms Nyioh Hong their blatant failure to file income tax or GSTreturns, and to pay income tax and GST, was always likely to be detected. The factthat the gross revenues they earned remained available in their New Zealand bankaccounts when restraining orders were made demonstrates that they were naïve. Theyare now in a world of trouble with the IRD.[160] This tax evasion provided a potential basis for a profit forfeiture applicationfor the unpaid tax, which totalled $1.6 million. But there is no basis for profitforfeiture of over $20 million. In any event, for the reasons I have explained above,the application for profit forfeiture in the amount of $1.6 million is declined becausethe IRD are now in a position to recover all the unpaid tax, as well as significantpenalties and interest in a way that eliminates any benefit from this offending.[161] I reserve leave on the question of costs, both in respect of the position of thefirst respondent, and in relation to the costs of counsel assisting. Whilst theCommissioner has succeeded in the application in relation to the first respondent it isfor much less than claimed. I do not know whether the first respondent offered toconsent to orders for lesser amounts. In relation to the costs of counsel assisting, itseems to me that his role was necessary for the Court to properly understand theCommissioner's applications, and that this may be a case where the Commissionerwould be directed to meet the costs under s 178 of the Senior Courts Act 2016.[162] Against that background I invite the parties and counsel assisting to seek toagree costs. If costs cannot be agreed I would invite the parties and counsel assistingto seek to agree to the order in which memoranda are to be filed. The memorandashould be no longer than 10 pages plus a schedule and should be filed within 10 daysof the release of this judgment, to be responded to within five working days thereafter.[163] This judgment was originally issued on 24 March 2023 to the parties only togive an opportunity to make application that any part of it should be suppressed. Suchan application was then made, and I have granted it in relation to limited matters. Thisre-issued judgment effectively redacts those matters.[164] Finally I am conscious that this judgment deals with a number of matters ofsome detail. I reserve leave to apply in relation to any errors, or matters that have beenoverlooked or misunderstood.Cooke JSolicitors:Luke Cunningham Clere, Wellington for the ApplicantOrd Legal, Wellington for the First Respondent