Breaching licensing and proceeds of crime

(Our thanks to Spencer Turner for this guest post)

Brent Council v Shah and Others, unreported 29 January 2018 (Crown Ct (Harrow))

The Proceeds of Crime Act 2002 (‘POCA’) has been successfully used by Brent Council against landlords for breach of licencing conditions.

Background

The Defendants were prosecuted by Brent London Borough Council for various different offences under the Housing Act 2004 in relation to a property at 1 Napier Road, London.

On 23rd May 2017 the Defendants were convicted of breaches of the provisions of Part 2 and Part 3 of the Housing Act 2004 and of the 2006 Management Regulations. A full transcript of the 23rd May 2017 judgment is available here (http://prospectlaw.co.uk/wp-content/uploads/2017/01/Brent-London-Borough-Council-v-Harsha-Shah-and-Others-1.pdf)

The District Judge said that there was evidence that the property likely contained more than 25 people at any given time (paragraph 230) and a monthly rent of at least £6,000 was generated. It was the judge’s view that money was being made at the expense of exploited tenants (paragraph 230).

An order was then made by the District Judge referring the case to the Crown Court for consideration of confiscation proceedings.

POCA

It was argued, by counsel for the Fourth Defendant, that a POCA confiscation was not available on the basis of the decision in Sumal & Sons (Properties) Limited v London Borough of Newham [2012] EWCA Crim 1840.

The Council argued that, distinguishing Sumal, the rent received in this case was the benefit of criminal conduct and not from a lawful contract. In Sumal the benefit to the Defendant was rent which came about by way of a lawful lease and not from the criminal conduct of a failure to licence the property.

In this case a selective licence was breached by the grant of some 35 to 40 licences or tenancies. It was only possible to grant those licences or tenancies by breaching the terms of the selective licence and so a benefit was derived by the Defendants from their criminal conduct in way distinguishable from Sumal.

The Crown Court found in the Council’s favour.

Comment

This is a significant judgment. Local authorities, where they are able to show a causal link between criminal behaviour and a benefit, can pursue landlords to pay back rents obtained rather than just levying fines.

We await a full transcript of the judgment, but a summary of the case for the Council has been helpfully provided by Edmund Robb at Prospect Law here (http://prospectlaw.co.uk/wp-content/uploads/2018/02/Brent-v-Shah-Article-02.2018.pdf).

Spencer Turner
Pupil Barrister
5 Pump Court Chambers

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.
Posted in Assured Shorthold tenancy, Housing law - All, Regulation and planning and tagged , .

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