Costly Consequences for Planning Breaches

Background

It has recently been reported in the press that two brothers convicted under planning laws are now subject to proceedings brought under the proceeds of crime legislation in which the State is seeking to recover £2.5 million from them.  This case underlines both the seriousness of “regulatory” criminal offences and the powers of the state when it comes to enforcing them. 

The case relates to a restaurant in south London (within a conservation area) owned by the two brothers. It is reported that in 2014, following complaints from neighbours, the brothers without first obtaining planning permission installed an extractor system and made alterations to the rear elevation of the property, including a metal staircase and raised platform. 

In October 2017, the brothers submitted an application for retrospective planning permission for the unauthorised works which was refused by the Council on the basis that the “excessive size”, location, materials and projection of the extraction system on the rear elevation was visually intrusive and would harm the conservation area.  A subsequent appeal against this decision was dismissed in July 2018. The inspector considered the works to be “incongruous and at odds with the character and appearance of the host property and the Conservation Area.” While that harm was found to be less than substantial, the Inspector did not consider the proposal resulted in wider public benefits that could outweigh the identified harm. Adverse impacts on the living conditions of existing neighbours (in relation to noise, vibration, smoke, and odour) were also identified. 

In 2019 the Council served a notice requiring the extractor and other structures to be removed, and, following failure by the brothers to remove the unauthorised works, subsequently launched a criminal prosecution. It is reported that a conviction was secured two years ago. 

Proceeds of Crime

However, that was not the end of the matter for the brothers, as the Court has since issued a confiscation order under the Proceeds of Crime Act 2002 (POCA).  Essentially, the confiscation order means that money gained as a result of the criminal activity will be confiscated by the State, reflecting the message that “crime doesn’t pay” and with the aim of contributing to the reduction of crime. 

The rules relating to confiscation proceedings are complex. Where the Court determines that it is not dealing with a case where the defendant has a criminal lifestyle, the Court will look to see whether they have benefitted from the criminal conduct and, if so, to what extent and how much of that benefit is recoverable. The Court will make an order that it is repaid accordingly.

The Court must not make an order which is disproportionate, however, proportionality is viewed in the context of the purpose of confiscation proceedings, which the Supreme Court has said is “to impose upon convicted defendants a severe regime for removing from them their proceeds of crime”.  This means that the Court may consider it proportionate to order a business to pay a sum equal to its turnover for the period of offending, rather than the profit it has made if it is considered that all the money made has been derived from the criminal activity. The rationale, as explained by the Criminal Prosecution Service in its guidance, is that “just as a burglar who steals from a bank vault cannot deduct the costs of the tools of this burgling trade” a criminal cannot deduct the costs of their offending from the amount to be repaid.

It is reported that the brothers have set up a crowd funding webpage to help pay for legal advice to challenge the proceedings. In the meantime, as is often the case in proceeds of crime proceedings, it is reported that the brothers’ bank accounts have been frozen.  The Court also has the power to require a defendant to surrender their passport in order to prevent them travelling abroad to dissipate the proceeds of crime and, again, press reports indicate that this has occurred in this case. 

Comment

Interestingly, it has been reported that during a House of Commons “topical questions” session for housing, communities and local government ministers recently, former minster for local government Simon Hoare stated that POCA “was never intended to be used by local authorities as an addendum to planning enforcement”.  The MP went on to ask whether the Secretary of State would issue guidance to local authorities confirming that they should not be using POCA as part of their enforcement toolkit.  In response, Housing Minister Steve Reed confirmed he will ensure a meeting with the appropriate minister is arranged.

However, unless and until guidance is issued (or any other legislative change enacted) clearly restricting the application of POCA to planning offences, the brothers’ plight serves as a cautionary tale.  People often underestimate the seriousness of regulatory breaches.  What may seem like a relatively minor infringement for something such as a planning rule could, in fact, result in a criminal offence being committed with the potential to result in lengthy and expensive criminal proceedings.  As this example shows, not only may an individual be left with a criminal conviction at the conclusion of those proceedings, but they could also face financial ruin if they also find themselves caught up in proceeds of crime proceedings.