Confiscation and enforcement notices: the roll-back from Panayi

Richard Furlong considers the Court of Appeal decision in Barnet v Kamyab, and the prospect of Edis LJ conducting a fact-finding confiscation hearing. An interesting issue arises as to the first-instance defendant’s right of appeal from that exercise.

Life, as the sprinter Carl Lewis once said, is about timing. In Panayi [2019] EWCA Crim 413 the Court of Appeal made the bold decision that where a summons alleged only a single day’s breach of an enforcement notice the parameters of the benefit in subsequent confiscation proceedings was limited to a single day’s rent. Recently, in London Borough Council of Barnet v Kamyab [2021] EWCA Crim 543 the appellant Council asked the Court of Appeal to reconsider the issue. The Crown Court, which considered itself bound by Panayi, had found against Barnet in a preliminary ruling on the benefit figure. The Court of Appeal, with Edis LJ presiding, overruled that decision and was then faced with the vexing question of what to do next.

The background facts

Mr Kamyab purchased a rental property in 2007. At some point it was converted into a series of self-contained flats. Mr Kamyab asserted that this was before he had bought it, but the Council took a different view. The Council served an enforcement notice. Mr Kamyab appealed and lost, save that he achieved an extension for compliance to September 2011. He then applied for a Certificate of Lawful Existing Use or Development and was unsuccessful with that as well. The Council ran out of patience and warned Mr Kamyab that if he did not comply with the enforcement notice by 1 June 2013, he would be prosecuted. A planning enforcement officer attended on 3 June, and following an exchange of correspondence, Mr Kamyab was advised that prosecution would follow in the event of non-compliance by 31 January 2014.

Prosecution followed, on the basis that “on or before 4 February 2014”, he had failed to take the steps required by the notice. Applications to stay the proceedings as an abuse of process failed before the Magistrates’ Court and on appeal to the Crown Court. Mr Kamyab was convicted on 2 February 2015 and remained convicted on 27 August 2016. The confiscation proceedings took another three years.

The issue on confiscation

The prosecution started from the position that Mr Kamyab’s particular criminal conduct should be calculated on the basis of the rent received from the properties over the entire period that they had been in his ownership. The defence position initially was that the particular criminal conduct should be limited to the period between 1 April 2014 and 10 February 2015. 

In February 2019, whilst the confiscation proceedings were ongoing, the Court of Appeal handed down the decision in Panayi. That decision established that where a summons was drafted in relation to a breach of an enforcement notice “on or about 18 February 2016”, the first-instance defendant was only liable in confiscation proceedings for particular criminal conduct on the day in question.

Counsel for Mr Kamyab understandably changed his position in the light of that decision, arguing that the Crown Court was bound by Panayi. The Council resisted on the basis firstly that there was a different between “on or before” (the wording in the Kamyab summons) and “on or about” (the Panayi wording); and secondly that the Court of Appeal in Panayi had not considered either the wording of section 8(2) of POCA in relation to benefit (below), nor the earlier decision of Salah Ali [2014] EWCA Crim 1658.

s.8(2) Proceeds of Crime Act 2002

The court must—

(a)  take account of conduct occurring up to the time it makes its decision;

(b)  take account of property obtained up to that time.

The decision in Salah Ali is authority for the proposition that rents received following the expiry of the time imposed for compliance with an enforcement notice are rendered criminal property regardless of the timing of any subsequent prosecution, since the court is required to take account of conduct continuing up to the time it makes its decision; and that depending on an analysis of the defendant’s intention, rents received prior to service of an enforcement notice are capable of amounting to criminal property on the basis that he is or might be guilty of the inchoate offences of attempt or conspiracy. This reflected the language of section 8 referred to above.

The first instance judge in Kamyab, faced with the competing arguments, decided therefore to deal with the argument as a preliminary ruling in the confiscation proceedings. Ruling in favour of the landlord, he found that there was no true distinction to be drawn between “on or about” and “on or before” and held that if the Council had wanted to pursue confiscation in respect of wider criminal conduct than the individual day, it would have been open to them (as indeed was the normal practice), to charge conduct between two dates or on some other more explicit wider basis. He held he was bound by the decision in Panayi. He therefore made a confiscation order limited to the benefit on 4 February 2014 as represented by the pro-rata rent received for that day.

Between the decision of the first-instance judge at Harrow Crown Court in Kamyab and the Court of Appeal, however, there had been a further decision of the Court of Appeal in London Borough of Haringey v Boruch Roth [2020] EWCA Crim 967.

The summons in Roth had been drafted on a single day basis: “on 18 May 2017” the defendant had failed to comply with an enforcement notice which had required him to cease using the property as self-contained flats by 9 March 2013. However, the Court of Appeal took the view that Panayi could be distinguished on the basis that the summons in that case did not particularise the ‘compliance by’ date, whereas the summons in Roth did. Further, the particulars in the Statement of Facts in Roth had set out that it was the entire period (from 2013 to 2017) which was covered by the summons.

The Court of Appeal in Roth also relied in its decision on the much earlier House of Lords decision in Hodgetts v Chiltern District Council [1983] 2 AC 120, authority for the proposition that breach of an Enforcement Notice was a continuing offence and not a series of offences committed each day; thus a summons drafted “on and since” was not bad for duplicity.

It is worth noting in passing that the Court of Appeal in Roth dismissed an argument following Sumal Properties v Newham [2012] EWCA Crim 1840 that since the lease contracts were not themselves unlawful, the rental income deriving from those contracts could not be the proceeds of crime.

The approach of the Court of Appeal

The Court of Appeal in Kamyab noted the analysis of the Divisional Court in two separate cases. The first was Russnak-Johnston v Reading Magistrates' Court [2021] EWHC (Admin) 112, which considered the approach to deciding whether offences were one-off or continuing in the context of the Town and Country Planning Act. The Divisional Court held that it turned on a construction of the particular wording – whether the offence related to a ‘do’ notice or a ‘desist’ notice. Failing to provide information was a continuing offence, but making a false or misleading statement in response to a notice was a one-off offence

The second of the Divisional Court cases considered was Ceredigion County Council v Robinson & ors [2020] EWHC 3425 (Admin), where Stuart Smith LJ in the context of summonses in relation to enforcement notices observed that dates in relation to summonses were not a material averment; breaches were ongoing offences committed at any time after the end of the period for compliance with a notice. All the prosecution had to prove was that the period for compliance with the notice had expired.

In reaching its decision, the Court of Appeal in Kamyab expressed distaste for the decision in Panayi and endorsed a recommendation from counsel for Barnet to confine it to its own facts. Whilst not finding that Panayi was decided per incuriam, the Court thought it very unlikely that it could be followed since a rational prosecutor would avoid drafting a summons using identical working. Edis LJ held that on a true construction, the summons against Mr Kamyab reflected a continuing offence committed throughout the period of non-compliance.

What is to be done? Fact-finding in the Court of Appeal

Having reached an entirely predictable decision given the choice between Roth and Panayi, however, that was not an end of the matter. Edis LJ then faced the more difficult issue of deciding what to do about the confiscation proceedings against Mr Kamyab. No findings of fact had been made at first instance since the argument was dealt with as a preliminary issue. The Council asked for the confiscation order to be quashed and the matter remitted to the Crown Court, but counsel for Kamyab argued successfully that there was no power to remit from an appeal against the making of a confiscation order, rather than from the refusal to make such an order under sections 31 and 32 of POCA.

The existing confiscation order could not be quashed, since by virtue of section 85(5) of POCA that would have brought proceedings to a conclusion.

Edis LJ expressed dissatisfaction with the approach of all parties at first instance to decide the matter on a preliminary ruling, and recommended that in future, even where issues need to be decided in limine, the Crown Court should rule on all matters prior to any appeal, so that the Court of Appeal would not be left in the limbo it was faced with in Kamyab. The attention of the first instance judge had not been drawn to Bajaj [2020] EWCA Crim 1111 and Parveaz [2017] EWCA Crim 873, in which the taking of preliminary points without deciding the remainder of the issues had been deprecated.

Given the size of the potential order to be made against Mr Kamyab, Edis LJ “on this one occasion only” was prepared to order that confiscation proceedings could be conducted effectively de novo in the Court of Appeal.

Consequences and thoughts on the case

On the face of it, Panayi was unlikely to be a decision which stood the test of time. The conflicting views of the higher courts in the previous authorities gave the Court of Appeal ample room for manoeuvre in distinguishing it, and Edis LJ took full advantage in Kamyab.

The Court of Appeal has however, in its desire not to let the bad guy win, set up an unusual situation. Whilst section 33 of POCA gives a first instance defendant a right to appeal to the Supreme Court from a section 31 decision of the Court of Appeal, article 11 of the Proceeds of Crime Act 2002 (Appeals under Part 2) Order 2002 requires the certification of a point of law of general public importance, mirroring the requirement in section 33 of the Criminal Appeal Act 1968.

Whilst findings of fact are generally not capable of review at appellate level other than in the Crown Court or on the basis of unreasonableness in certain circumstances, first instance findings of law ought to be capable of general review in accordance with Mr Kamyab’s general Article 6 fair trial rights, notwithstanding the failure of the United Kingdom to ratify Protocol 7 to the Convention, Article 2 of which sets out the right in criminal proceedings to have a sentence reviewed by a higher tribunal.

In Mr Kamyab’s case, it is apparent that the temporal parameters of the particular criminal conduct benefit figure are the subject of a legal dispute. There may be other legal issues as well in relation to the amount to be recovered.

Whilst the prosecution has exercised a right of appeal, the first instance defendant has not done so and indeed has potentially been deprived of effective exercise of that right given the requirement for a point of law of general public importance before he can go to the Supreme Court. He faces a difficult and exacting tribunal which has already expressed little sympathy for his position.

Richard Furlong is a barrister at Carmelite Chambers. He specialises in financial crime and confiscation work and has undertaken substantial work in relation to local authority enforcement proceedings. He is the co-author of International Money Laundering and Counter Terrorism Financing – a UK Perspective (Sweet & Maxwell), together with Paul Hynes and Nathaniel Rudolf (counsel for Kamyab).