Thursday, 4 April 2019

Court of Appeal cuts scope of POCA confiscation orders

[The last few paragraphs of this post were slightly revised on 2 May 2019 in order to make my concluding remarks clearer.]

I have no particular interest in POCA as such, but there have been several important cases relating to planning enforcement prosecutions which have resulted in some spectacularly large confiscation orders. The Court of Appeal, however, seems to think that LPAs have been getting rather over-excited at the prospects of obtaining juicy confiscation orders, and in a couple of cases on which I have previously blogged the Court has cut down on the scope for these orders being made. There is now another Court of Appeal decision in which a confiscation order in the Crown Court has been drastically reduced.

This is the case of R v Panayi [2019] EWCA Crim 413. The appellant was convicted in the Magistrates’ Court in 2016 of failing to comply with an Enforcement Notice (under section 179 of the 1990 Act). He was committed to the Crown Court for sentence and for a confiscation order to be considered under the Proceeds of Crime Act 2002. The Crown Court made a confiscation order in the sum of £95,920 and fined the appellant £25,000.

The breach of planning control (comprising the construction of a mansard roof extension on his property which materially exceeded the dimensions for which planning permission had been given) was the subject of an Enforcement Notice that had been served as long ago as 2003. An appeal against that notice under section 174 was dismissed in 2004, but time for compliance was extended by a year to February 2005.

Correspondence between the LPA and the appellant about his non-compliance with the EN began in 2006, some 21 months after the expiry of the compliance period. However, some five months later, the Council eventually wrote to the appellant stating the Council would not at this time be prosecuting for the non-compliance of the enforcement notices, relating to the construction of the roof extensions at the above addresses, but adding that should there be any further serious breaches of planning process the authority would consider taking legal action. (It appeared from a council report made some years later in 2014 that in 2007 the council had felt that it would not to be in the public interest to prosecute the appellant at that time.)

In view of that letter, the appellant took no steps to comply with the Enforcement Notice. He continued to use the property with the roof extension as built which was let out as two flats on which he received rent. It was accepted on the appellant's behalf that his conduct remained unlawful. There was no planning permission and the Enforcement Notice, although it had not been the subject of a prosecution, had not been withdrawn.

In 2014 the appellant sought to regularise the position by applying for an LDC to establish that the existing use of the roof extension as top floor flats was lawful. That application was rejected by the council and an appeal was unsuccessful (as it was bound to be as an LDC cannot be granted in respect of development that is the subject of an extant enforcement notice).

It seems that it was the dismissal of the LDC appeal in 2016 that prompted the council to reconsider the question of prosecution. The council decided that it would institute a prosecution and did so by summons issued on 28 June 2016. The offence alleged in the summons was:

"On or about 18 February 2016, you being the owner of 282-284 Caledonian Road, London, N1 1BA breached an Enforcement Notice issued by the London Borough of Islington on 22 August 2003 in respect of unauthorised developments at 282-284 Caledonian Road by failing to comply with the remedial action required in Schedule 4 of the Enforcement Notice, contrary to section 179(1) and (2) of the Town and Country Planning Act 1990”

When the matter came before the Crown Court for sentence, the Council was seeking a confiscation order in the sum of £243,817.98, calculated on the basis of the gross rental income from the two self-contained flats occupying the unauthorised enlargement of the mansard roof space, from the date of non-compliance with the Enforcement Notice (12 February 2005) to the date of conviction (26 September 2016). This figure also included an allowance for inflation. However, by the time of the hearing in the Crown Court, it was common ground that this was not a case of general criminal conduct and therefore the lifestyle presumptions in POCA were not applicable in this case, so that what needed to be assessed was the benefit from the appellant's particular criminal conduct.

The Crown Court judge rejected the appellant’s submission that the only period of time which should be considered was the period between the issue of the summons and the conviction, on the ground that this did not reflect the criminality of the appellant's actions, but the judge accepted that the letter sent by the local authority in March 2007 (when it said that it would not be taking any action at that time) meant that it was asserting that it was not then in the public interest to prosecute and so this also needed to be taken into account. The Crown Court was therefore faced with a difficult balancing act but, taking all the factors into account, the judge assessed the benefit to be £95,920 and ordered that sum to be paid within the next three months, with one year's imprisonment in default.

In the Court of Appeal, various points were canvassed on behalf of the appellant but, in the event, the case turned on a single point, namely the terms of the offence that had been alleged in the Magistrates’ Court summons. The appellant was charged with being in breach of the Enforcement Notice "on or about 18 February 2016". That charge, in their lordships’ judgment, had to be interpreted as relating to a criminal offence committed on a single day. Thus the charge related only to a single day in February 2016, on or about the 18th of that month. That was the only criminal conduct of which the appellant was convicted. It was for the council, as the prosecuting authority, to decide the period over which the conduct charged should extend. Section 179(6) of the 1990 Act states clearly:

"An offence under subsection (2) or (5) may be charged by reference to any day or longer period of time and a person may be convicted of a second or subsequent offence under the subsection in question by reference to any period of time following the preceding conviction for such an offence."

Here the council chose to charge by reference to a single day. The Court of Appeal therefore addressed the question as to whether the calculation of benefit for the purpose of confiscation proceedings can extend over any greater period; specifically, whether it can extend in respect of the whole period from the expiry of the period for compliance to the date of conviction.

By the time of the hearing before the Crown Court, the prosecution had accepted that this was not a case of general criminal conduct and therefore the point was not pursued in submissions before him. Nevertheless, the Court of Appeal re-considered this point. Section 6 of POCA sets out the conditions for proceeding to the making of a confiscation order. They include that a defendant is convicted of an offence or offences in proceedings before the Crown Court, or that he is committed to the Crown Court for sentence in respect of an offence or offences under various provisions of the Sentencing Act, or that he is committed in respect of an offence under section 70 with a view to confiscation being considered. The court then has to decide whether or not the defendant has a criminal lifestyle, as it was accepted in this case that he did not. Then it has to decide whether he has benefited from his particular criminal conduct and go on to decide the recoverable amount.

These provisions are developed further in section 76. Particular criminal conduct is defined at subsection (3) as “Particular criminal conduct of the defendant is all his criminal conduct which falls within ………….. conduct which constitutes the offence or offences concerned …….". Subsection (4) provides: "A person benefits from conduct if he obtains property as a result of or in connection with the conduct." So it is clear that the benefit which the court needs to identify is the benefit obtained "as a result of or in connection with" the criminal conduct of which the defendant has been convicted, or in respect of which he has pleaded guilty. There is no scope for the court to find that the defendant has committed other or more extensive offences and to go on to identify the benefit which he has received from such further offending. This is apparent from the clear words of the statute but is in any event confirmed by the commentary in Blackstone’s Guide to POCA, at paragraph 2-58, referring to the distinction between general and particular criminal conduct:

"The crucial distinction is that an inquiry into particular criminal conduct is restricted to the offences which are proved or admitted in the current proceedings, including offences taken into consideration (section 76(3)). The prosecution cannot embark on a trawl through the past and the judge cannot apply the assumptions. The benefit resulting from the offences must be proved on the balance of probabilities by evidence and necessary inference from the circumstances."

The argument on behalf of the LPA was that t the words "in connection with" in section 76(4) are wide words which are capable of extending the scope of the relevant benefit, and did so in this case, with the effect that the benefit received by the appellant over the whole period since 2007 was obtained in connection with the conduct of which he was convicted, that is to say in connection with the offence committed on or about 18 February 2016. They pointed out that the offence of failing to comply with the Enforcement Notice was a continuing offence which occurred at any time after the end of the period for compliance (see the terms of section 179(1) and (2) of the 1990 Act). It had been determined by a planning inspector on appeal that there had been no compliance with the enforcement notice since 18 February 2005 The date by which the appellant had been required to comply with the Enforcement Notice). The council’s contention, therefore, was that this was a case where there was clear and uncontested evidence of criminal conduct over a lengthy period from 2005.

The Court of Appeal’s attention was drawn to R v Sangha [2008] EWCA Crim 2562, but there is nothing there, in their lordships’ judgment, which entitles a court to extend the meaning of particular criminal conduct beyond the conduct of which a defendant has been convicted or in respect of which he has pleaded guilty. The benefit obtained as a result of or in connection with such conduct must be referable to the offence with which the defendant is charged and of which he is convicted. It is not open to a court in confiscation proceedings to find that benefits obtained over an extended period were obtained in connection with the commission of an offence on a single day - at any rate on the facts of this case. The rent obtained by the appellant letting out the flats in question from 2005 or 2007 onwards could not be regarded as having been obtained in connection with the criminal conduct of which he was convicted, which consisted only of being in breach of the Enforcement Notice on a day on or about 18 February 2016.

The appeal against the confiscation order was therefore allowed. The benefit which the appellant obtained was limited to a single day's rent which, the Court was informed, amounted to £58. Accordingly, the Court of Appeal quashed the confiscation order made by the Crown Court and substituted an order in the sum of £58. (The £25,000 fine was nevertheless upheld.)

Local planning authorities should derive two points from this judgment. First, care must be taken over the drafting of the summons or indictment. If the offence is one that has continued over a lengthy period, then the charge should relate to the whole (or substantially the whole) of that period. The second point is slightly more difficult. It seems that the Court of Appeal accepted in Panayi that the type of conduct involved in this case did not amount to a criminal lifestyle in accordance with the presumptions laid down in POCA. If that is to be taken at face value, then it would appear to cut down the potential extent of confiscation orders under POCA in planning cases.

The point is a ‘difficult’ one because it had previously been my understanding that 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", although 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.]

It was on this basis that the Court of Appeal upheld a substantial compensation order in Basso & anor v. R. [2010] EWCA Crim 1119. However, there appears now, as a result of Panayi, to be some uncertainty as to whether a Crown Court can calculate the amount of a confiscation order under POCA on the basis of ‘general criminal conduct’ (so as to mulct the entirety of the proceeds from the date when compliance was required to the date of conviction), or whether the continuation of the offence over more than six months cannot, in itself, be taken to be “general criminal conduct” or to amount to a “criminal lifestyle” (notwithstanding the actual wording of section 75), so that in a planning enforcement case the confiscation order may be calculated only in respect of the defendant’s particular criminal conduct, i.e. restricted to the period covered by the offence that has actually been charged.

I confess that I am somewhat confused by the apparent inconsistency between Basso (and other similar cases in the past few years) and the decision now reached by the Court of Appeal in Panayi. This apparent discrepancy does perhaps suggest that this is an issue that may perhaps have to be reviewed, either by a differently constituted Court of Appeal in a future case, or by the Supreme Court.



  1. All good fun.

    I wonder Martin whether there is a connection (explicit or implicit) between the drafting error that led to a one day offence and the conclusions on 'criminal lifestyle'. If you put the two points together does that not imply that provided the original prosecution covers a period of at least six months' breach then the criminal lifestyle test is probably met?
    (And I doubt many LPAs would often prosecute a breach of enforcement notice in less than six months.)

    1. I am inclined to think that Richard W is right, and this would certainly have been my view before Panayi, but this latest judgment appears on the face of it to have thrown some doubt on this. One would have to read the judgment more closely to see whether the CA really did mean that continuation of an offence for six months is not enough in itself to amount to a ‘criminal lifestyle’, which does not appear to me to reflect the literal meaning of the legislative wording in POCA . (Maybe I was reading too much into their lordships’ words?)