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By Scott Stemp of http://planningblog.org/

Feb 5, 2011

So far we've seen how people who breach planning controls and make financial gains from those breaches can end up facing a significantly larger bill than they ever might have dreamed of (or have been advised about...).

But the client's question "How much will this cost me?" doesn't end with the assessment of how much benefit the defendant is calculated to have gained from their unlawful conduct as per the Proceeds of Crime Act 2002. A Prosecutor can't take what the defendant doesn't have (although i'm fairly sure there's probably some kind of amendment on the way to change that in these financially straitened times).

Imagine the calculation of the defendant's 'total benefit gained' as the topline amount. So first let's look at bringing that topline figure down.

We're working on the premise that the defendant has a criminal lifestyle for the purposes of confiscation (if you don't know what that means then you haven't read enough of my other posts). That means that the prosecutor and the court will assume every single penny of income, expenditure and assets in the preceding six years was funded by the proceeds of criminal conduct.

As all good lawyers know, assumptions are there for rebutting. But how?

Again this is best understood through an example. Let's go back to Mr Bloggs who we are advising and representing in his latest prosecution. We know Mr Bloggs has had £18,500 from his various 'business' activities of which we are aware. But the Financial Investigator discovers two cash payments into his bank account three years ago, each of £25,000. So you all know that the recoverable amount jumps from £18,500 to £68,500 (£18,500 + £50,000) as the £50,000 is assumed to be criminal proceeds.

The first attack on the assumption - the defence can show it is incorrect to make that assumption (see s10(6)(a) POCA). The burden is on the defence to prove on the balance of probabilities that (for example) there is legitimate source for the monies found. If there is a legitimate source for the money, it would be incorrect to assume an illegitimate source.

Alternatively the defence can submit that to make the assumption would give rise to a serious risk of injustice (s10(6)(b) POCA). Here there is no evidential burden on the defence - the court itself must be aware and avoid serious risks of injustice - but this really is about avoiding injustice through the application of the assumptions (e.g. to avoid double counting) AND IS NOT ABOUT PERCEIVED INJUSTICE(S) RELATING TO HARDSHIP AS A RESULT OF THE ASSUMPTIONS BEING APPLIED. That's very important - so that's why i've put it in bold for you.

That's about it for reducing the topline figure. But let's get to what most clients are interested in - the bottom line.

What gets written on the cheque is not the value of the benefit - it's the amount that is available, which is not necessarily as much as the total benefit. That 'available amount' is the bottom line.

Let's assume that we can't explain Mr Bloggs' additional £50,000 and the 'benefit' is therefore calculated to be £68,500. But Joe Bloggs has spent most of his ill-gotten car boot (and other) gains on lovely holidays on the Costa del Crime. He has no savings, no home (he rents his house) and no other significant assets apart from his white van, valued at £2,000.

The topline benefit figure is £68,500 but the bottom line 'available amount' that Joe Bloggs can be ordered to pay is only £2,000 - the value of his van. Not much, you might think - but remember this represents the total value of any valuable assets that he holds. he simply doesn't have anything else. So what happens to the balance of £66,500?

Much like the Guinness surfer, it waits. That what it does. When Mr Bloggs wins the lottery (or the pools, for the old school amongst you) then the prosecution can come back and take more money until the full £68,500 has been paid. Years (even decades) later when Bloggs comes into money (for example when his ultra wealthy aunt dies and he inherits a house in grounds) then just wait for the knock of the prosecutor on the door with an unpaid tab to make good.

A glimmer of hope for defendants? Well, that's a point of view thing, isn't it. Bloggs only has to pay what he can now; he doesn't have to pay the full £68,500 straight away - but he can't escape it forever. And he does in fact have to pay such sums as are assessed as being all of his assets until the 'benefit' figure is satisfied.

What about defendants who move money around, who hide their assets from the taxman and other prying eyes? Well, Financial Investigators are really very good at finding hidden savings accounts, offshore banking, foreign holiday homes and valuations of cash lifestyles. But even they can't take the kitchen sink. Yet.

The short point for this series is to be aware of confiscation as a very real and increasingly likely issue in planning enforcement. Clients need to receive better advice; planners and lawyers need to give better advice. And planning authorities need to be aware of the full extent of the powers available to them when considering what can be achieved through planning enforcement.

Advisors need to recognise when confiscation might be an issue for their client. This part is simple - all you need do is ask yourself this - has my client's alleged breach of planning control in any way led to financial gain in any way? If the answer is yes (or even 'maybe') then your client needs detailed, expert and early advice on the possible implications for them of confiscation proceedings. No-one wants a client with a legitimate complaint that they were misadvised by their professional advisors, do they?

Let's leave this topic from where we started, with the observations of the judiciary on point:

"I have received the strong impression that neither the [appellants] nor...their accountant appreciated fully the risk that the companies involved in...the 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...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."
- R. v. Del Basso and Goodwin [2010] EWCA Crim 1119

Next? How to enforce against defendants with 'secret dwellinghouses' even after four years...

As ever - any questions, get in touch. Tell your friends about this site and don't forget to subscribe!

Scott

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