Tuesday, 1 June 2010

Another weapon in the enforcement armoury

I don’t usually look up judgments in the Criminal Division of the Court of Appeal, but my attention has been drawn to a planning case there in which judgment was given on the 19th May - Basso & anor v. R. [2010] EWCA Crim 1119

The appellants ran a ‘park and ride’ airport parking facility from a date in 2000 without planning permission. An enforcement notice was served in January 2003 and an appeal against that notice was dismissed in October 2003. Permission to appeal to the High Court was refused in February 2004. No attempt was made to comply with the EN, and in September 2004 the LPA prosecuted the appellants in the Crown Court for failure to comply with the notice. After a trial, the appellants were convicted of the offence in November 2005, and in December of that year each of them was fined £20,000. Applications for leave to appeal against both conviction and sentences were refused by the Court of Appeal.

The unauthorised use nevertheless continued and so, in January 2006, the LPA launched a second prosecution for failing to comply with the EN. In June 2007 the defendants pleaded guilty. The LPA also launched confiscation proceedings under section 6(3)(a) of the Proceeds of Crime Act 2002. The case for the prosecution was that the 'park and ride' operation became criminally unlawful from the moment the EN became effective, that the appellants were to be treated as having had a criminal lifestyle and, as a result, were subject to the assumptions set out in Section 10 of the 2002 Act, unless these assumptions were incorrect or would result in a risk of serious injustice.

I don’t propose to discuss the technicalities of the confiscation regime under POCA in any detail (as the Court of Appeal did in this judgment), but this case does underline the fact that a confiscation order may be available as an additional remedy in enforcement cases where there is a continuing breach of an Enforcement Notice, from which the developer derives a financial benefit.

The relevant part of Section 6 of POCA provides that the Crown Court must proceed under this section if the following two conditions are satisfied. First, the defendant must either be convicted of an offence or offences in proceedings before the Crown Court or be committed to the Crown Court for sentence; secondly, either the prosecutor must ask the court to proceed under this section, or the court may of its own motion decide that it is appropriate for it to do so. In either event, the court must decide whether the defendant has ‘a criminal lifestyle’ (see below) and, if so, whether he has benefited from his general criminal conduct. If the Court decides that he does not have a criminal lifestyle it must decide whether he has benefited from his particular criminal conduct. If the court decides that the defendant has benefited from the conduct referred to, it must decide the recoverable amount, and make a confiscation order requiring him to pay that amount.

A defendant has a 'criminal lifestyle' if one of the offences of which he is convicted falls within the statutory catalogue in Section 75 of POCA. The list includes “an offence committed over a period of at least six months and the defendant has benefited from the conduct which constitutes the offence", but this provision is not satisfied unless the defendant obtains relevant benefit of not less than £5,000.

Section 76 of POCA provides that “criminal conduct” is conduct which constitutes an offence in England and Wales. “General criminal conduct” of the defendant is all his criminal conduct, and it is immaterial whether that conduct occurred before or after the passing of the 2002 Act, or whether property constituting a benefit from that conduct was obtained before or after the passing of this Act. A person “benefits” from conduct if he obtains property as a result of or in connection with the conduct. If a person benefits from criminal conduct his benefit is the value of the property obtained.

These provisions were satisfied in this case and the Court of Appeal dismissed an appeal against the confiscation order. It had been argued on the appellants’ behalf that the court should pay attention to the reality and look at what the appellant 'actually made' from the crimes to which he pleaded guilty on the basis that almost all the income which derived from payments by members of the public to park and then be taken to Stansted Airport was expended on the costs of operating the scheme, including VAT, national insurance contributions for the staff, business rates and rent, rather than just looking at the financial turnover of the business. However, having reviewed various previous judgments, the Court rejected the argument that the language of the statute permits the court to look at what the appellant 'actually made' net of all expenses. A leading case [May] shows that the reverse is the case ("Benefit gained is the total value of the property or advantage obtained, not the defendant's net profit after deduction of expenses."). It is for the judge in the Crown Court to find as a fact what property the appellants had obtained and, thus, the extent of the benefit. What happens to that benefit after it has been obtained (for example, how it might have been spent) forms no part of the statutory test. That is what the judge did in this case and his findings had not been challenged as wrong or unjustified by reference to the evidence. Neither did he fall into error in his analysis of the law.

The Court ended by quoting with approval the words of the judge in the Crown Court :

"I conclude with a final observation about the mentality of the [appellants] and other similar law breakers. I have received the strong impression that neither the [appellants] nor … their accountant appreciated fully the risk that the companies and individuals involved in the park and ride operation faced from confiscation proceedings. They have treated the illegality of the operation as a routine business risk with financial implications in the form of potential fines or, at worst, injunctive proceedings. This may reflect a more general public impression among those confronted by enforcement notices with the decision whether to comply with the law or to flout it. The law, however, is plain. Those who choose to run operations in disregard of planning enforcement requirements are at risk of having the gross receipts of their illegal businesses confiscated. This may greatly exceed their personal profits. In this respect they are in the same position as thieves, fraudsters and drug dealers. Although the peculiar facts of the present case have led me to exclude the receipts of the parking company from the confiscation, that is a decision reached very much having regard to the unusual circumstances presented to me. [Counsel for the prosecution's] submission that a defendant should not escape the confiscation consequences of his conduct by the expedient of running his unlawful operation through a company will, I expect, generally carry the day."

Well, that should cheer up enforcement officers on a wet Tuesday morning.


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