The recent Court of Appeal decision in Del Basso illustrates that the courts consider that Confiscation Orders under the Proceeds of Crime Act 2002 can be used in cases of regulatory offences.

In June 1997 a planning application was made requesting that 201 parking spaces be allowed on land at Dunmow Road, Bishops Stortford. This land was owned by Mr Del Basso, and was rented to Bishop’s Stortford Football Club (the ‘Club’). The original planning application intended to provide parking for the football supporters who visited the Club. Conditional planning permission was granted but restricted to those days when football matches were taking place.

Four weeks later a further planning application was made for a park and ride facility at the site, but this application was rejected by the Local Authority in July 2000. At about the same time, the Local Authority became aware that the site was already being used as a park and ride facility. All warnings from the Local Authority to end the business were ignored and the park and ride facility continued to operate.

On 28 January 2003, enforcement proceedings to end the park and ride facility began. An Enforcement Notice was obtained and all appeals against it were unsuccessful. Throughout these procedures, the park and ride business continued to operate.

On the 9 March 2004, the Local Authority warned Mr Del Basso and Mr Goodwin (who were now trading as Bishop’s Stortford Football Club Members’ Parking Association a non-incorporated partnership of which they were the only partners) that if the business continued beyond 11 August 2004 a prosecution would commence without further notice.

Despite this warning, the business continued beyond 11 August 2004. The Local Authority began a prosecution on 17 September 2004. In the run-up to the trial, the Bishop’s Stortford Football Club Members’ Parking Association Limited was formed with Mr Del Basso and Mr Goodwin each holding 50% of the shares in the company. At the trial, both were convicted and sentenced to a fine of £20,000 each. Shortly after the trial, the Local Authority again visited the site and found that the park and ride business was continuing as before. On 17 January 2006, a second prosecution began. Mr Del Basso and Mr Goodwin pleaded guilty to all charges.

Confiscation proceedings then began under section 6(3) of the Proceeds of Crime Act 2002 (‘POCA’). The judge held that the park and ride business became criminally unlawful from when the Enforcement Notice became effective and that Mr Del Basso and Mr Goodwin were to be treated as having a criminal lifestyle from then onwards within the meaning of POCA. The deemed turnover of the company was in excess of £1.8m and this sum could be subject to a Confiscation Order. Taking into account personal circumstances, a Confiscation Order for £760,000 was made against Mr Del Basso and a nominal order made in respect of Mr Goodwin, as he was now bankrupt.

Both Mr Del Basso and Mr Goodwin appealed against the Confiscation Orders. The basis of the appeal was that the business had only realised £180,000 in profits and that this should be the sum that any Confiscation Order should be based on. It was argued that neither of them had personally profited from the business and they obtained no real benefit from the breach of the Enforcement Notice.

Del Basso and Goodwin’s case was that the purpose of the business was to provide income for the Club and no element was for personal profit. They argued that the court should recognise that all the income gained was used on the costs of operating the scheme including VAT, National Insurance contributions, business rates and rent that went to support the Club. They argued that the judge should have deducted these monies when calculating the benefit they had received and the benefit was to be equated with net profit, not turnover. They argued that, in these circumstances, the original Confiscation Orders were an abuse of process.

The Court of Appeal dismissed Del Basso and Goodwin’s appeals stating that what was relevant was the property obtained from the breach. It held that a POCA procedure was based on the income received by the offender and no account should be taken of what happened to it. All monies derived from criminal activity were subject to POCA and liability extended to the aggregate total. The court also held that there was no abuse of process. Del Basso and

Goodwin had been given several warnings by the Local Authority of what would occur if they did not cease their park and ride business. It was their duty to obey the law and they had chosen not to do so. It was held that confiscation proceedings were appropriately brought after the second prosecution.

It is obvious from this case that a very stern view was taken by the court in relation to the application of POCA. In relation to regulatory offences which are prosecuted in the criminal courts, although the defendants may not consider the breach to be a criminal one, it is now clear that authorities are taking steps to ensure that the full criminal sanctions are applied, including confiscation of the proceeds of the crime under POCA.  

As such, where there is a breach of specific regulations, and that breach continues, there could be an application under POCA to recover assets which have been obtained by the company as a result of the breach. This would be in addition to any fines and costs that are paid by the company at the original criminal prosecution. POCA is very strict and it would be difficult for any company that has been found guilty of a breach to escape POCA and the potential financial liabilities that would result.