In the construction sector, there is quite rightly a focus on health and safety duties, but businesses and their leaders should beware that breaches of planning control also carry a sting in the tail.
Breaches are traditionally remedied by Planning Departments at local authorities using enforcement or stop notices, injunctions and/or fines.
However, a recent case highlighted that in addition to these sanctions, failure to remedy breaches identified in an enforcement notice constitutes a criminal offence. The same can be said of failure to comply with listed building consent or the carrying out of works to a listed building without consent.
Consequently, as well any fine or custodial sentence that might be imposed by the courts where a business and/or individual is convicted of committing a planning offence, they may also fall foul of the Proceeds of Crime Act 2002 (PoCA 2002), and be subject to confiscation proceedings. In a recent case (R v Del Basso and Goodwin), the amount to be repaid by an individual director amounted to £760,000.
Local planning authorities are becoming more savvy in using the full arsenal of their development control powers. This article looks at what constitutes proceeds of crime and the facts of this recent case.
What is "Proceeds of Crime"?
Under PoCA 2002, any financial benefit obtained as a result of a committed offence can be treated as the proceeds of crime. However, if a course of criminal conduct is identified under schedule 2 of PoCA 2002, the whole profit of the business for the last six years could fall under scrutiny, and financial benefit not due to the breach could also be confiscated.
PoCA 2002 is extremely draconian in nature, as the law requires the defendant to prove that monies are not the proceeds of crime, "on the balance of probabilities". The disclosure required by the criminal courts to prove this requires provision of detailed explanation into financial records.
If a confiscation order is not paid, a custodial sentence must be served in default and the monies still remain payable. The length of the custodial sentence is determined by law in correlation with the amount of monies owed.
What are the facts of this recent case?
Del Basso and Goodwin concerned the chairman of a football club who, together with another director, was running a park and ride scheme from the football club car park. Planning permission had been granted for the use of the car park for visitors to the club, but refused in relation to the proposed park and ride scheme.
Nevertheless, the directors of the football club had commenced operation of the park and ride scheme. They continued to do so despite numerous written warnings from the local authority, culminating in an enforcement notice.
The park and ride scheme continued, and the directors of the business were convicted and fined for the breach of the enforcement notice. Undeterred, the scheme continued and was indeed expanded.
Proceedings under PoCA 2002 were instituted following the conviction for failure to comply with the enforcement notice.
It was submitted and accepted by the court that the directors had made no personal profit from the venture. It was also proved that the majority of the "proceeds" had been used to fund the football club. The Judge found this irrelevant in the context of the confiscation proceedings. The key factor was the benefit which had been obtained by the illegal operation of the scheme, not what happened to the monies.
One of the directors was bankrupt and therefore faced only a nominal fine, as he did not have any realisable assets. The other director faced a confiscation order of £760,000, with a default sentence of 18 months' imprisonment imposed.
An appeal was lodged and dismissed. The Judge presiding over the hearing remarked:
"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....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."
Businesses and directors – beware the sting in the tail!
Although this is a far cry from the original intention of PoCA 2002, it is clearly a tool that some local planning authorities are prepared to deploy. Not only do such proceedings act as a potential deterrent to offenders who have deliberately chosen not to comply with the law, any local planning authority that is successful in proceedings under the legislation is able to keep up to a third of the assets recovered, which may mean in these austere times there is an added incentive and we see an increase in PoCA 2002 applications.
The clear message from this case is for businesses and directors to ensure they have the relevant procedures in place to ensure they are not breaking planning laws. Failure to do so can impact on businesses and directors to a far greater extent than perhaps envisaged.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
