A north London Council has failed to overturn a Crown Court decision to block an enforcement action that the judge said had the ‘improper motive’ of gaining ‘financial advantage’ by means of the Proceeds of Crime Act (POCA).

According to a judgement from the Court of Appeal, property owners the Knightland Foundation and Jacob Friedman had obtained planning permission to build a five-storey extension to a mid-terrace property in the London Borough of Islington to serve as a house in multiple occupation (HMO). It would have 14 beds and two maisonettes.

However, the property was instead converted into a block of 18 self-contained residential units. The owners did not comply with an enforcement notice requiring them to remedy breaches of planning control, and were subsequently prosecuted by the London Borough of Islington, the judgement said.

According to the judgement, the prosecution was stayed by a Crown Court judge in May 2018, on the basis that it amounted to an abuse of process.

The document said that following the issuing of the enforcement notice, a council planning officer had “indicated to the respondents that the principle of an 18 room hotel seemed acceptable to him”, and a planning application was submitted.

But the judgement said that emails between enforcement officers and members of the planning team “revealed that the enforcement team were determined to press ahead with the prosecution and to apply for a confiscation order under the Proceeds of Crime Act 2002”.

The POCA allows the courts to issue confiscation orders for money generated from illegal activities and typically involves much greater penalties for those found guilty than if they had simply been prosecuted for breaching planning enforcement.

The council went on to refuse the application, after what the Crown Court judge described as a “volte-face” from planners.

According to the Appeal Court judgement, the Crown Court judge found that the enforcement team had in part been motivated by the prospect of achieving a financial advantage for the council by obtaining an order against the owners under POCA.

Appeal Court judge Lady Justice Hallett acknowledged that the owners were apparently in clear breach of the enforcement notice. However, she ruled that the enforcement team had attempted to improperly influence the determination of the hotel planning application and the potential financial advantage to the council was intrinsically linked to the decision to persist with the owners’ prosecution.

The judgement said that the council’s decision to prosecute was based on a report by two members of the enforcement team.

The judgement report said that the Crown Court judge “found the report to be flawed and that the decision to prosecute and to continue the prosecution based on it had an improper motive, namely the financial advantage to the [council] of a POCA order”.

“Those who advised the person who took the decision to prosecute failed to take into account a relevant factor, namely, the possibility that the respondents’ position could be regularised and allowed an irrelevant factor, namely, the possibility of their obtaining a POCA order to the authority’s financial advantage, to carry significant weight”, the judgement said.

The Court of Appeal gave its verdict on the 26 July 2018, but it was only published last week.

05 October 2018