London Borough of Islington, R (On the Application Of) v Bajaj

For the purposes of Proceeds of Crime Act 2002, a pecuniary advantage must have a sufficiently direct connection with the defendant’s criminal conduct. Avoiding payment of a cost which the defendant was legally obliged to incur may constitute such an advantage. However, a defendant who was under no obligation to provide alternative accommodation cannot be treated as having gained the notional capital cost of acquiring, building or leasing it.

Confiscation is directed to disgorging the proceeds of criminality. It is not an additional means of punishment. Prosecutors must formulate charges and confiscation cases so that the benefit sought reflects the proceeds actually obtained.

The respondent was convicted in the magistrates’ court of offences concerning the management of houses in multiple occupation at premises in Seven Sisters Road. The convictions concerned serious overcrowding, disrepair and failures to comply with the applicable management regulations.

On committal to the Crown Court, the local authority sought confiscation based not on rents received, but on the asserted saving represented by the notional cost of properly housing 12 occupants above the lawful maximum. The Crown Court held that this was not benefit for confiscation purposes and made an order for £200, representing one day’s rent.

The local authority applied for leave to appeal. The central issue was whether the notional cost of providing regulation-compliant alternative accommodation was a pecuniary advantage obtained in connection with the respondent’s offending.

1. The application for leave to appeal was refused. The Crown Court was right to reject the local authority’s proposed benefit figure. Confiscation under Proceeds of Crime Act 2002 requires the criminal to disgorge the proceeds of criminality; it must not be used as an additional punitive response to serious housing conditions.

2. The notional cost of acquiring, building or leasing alternative accommodation for the 12 excess occupants was too broad and speculative to have the required connection with the offending. The respondent was not under a legal obligation to house those people elsewhere. Rather, he was under an obligation not to house them at the premises. It was therefore artificial to treat the capital cost of alternative housing as a pecuniary advantage.

3. A saving may amount to a pecuniary advantage where it results from avoiding a payment which the defendant was lawfully obliged to make. The court distinguished Morgan, [2013] EWCA Crim 1307, because no such obligation to provide alternative accommodation existed here.

4. The rents received during the period of unlawful occupation would ordinarily have been the proper focus of a confiscation case. The way the charges had been drafted, and the manner in which the proceedings had been pursued, precluded that approach. The court could not cure the position by varying the order to reflect the suggested £14,305 repair cost: that figure had not been advanced clearly as a fallback, was disputed, and the appellate power under section 32(1) did not permit a remittal for valuation.

5. The court also reiterated that a preliminary issue in confiscation proceedings should be exceptional. It certified the judgment as citable to warn local authorities of the limitations of this proposed confiscation method and of the importance of appropriate charge drafting.

• Court of Appeal (Criminal Division): refused the local authority’s application for leave to appeal against the £200 confiscation order.

• Reading Crown Court: in a ruling dated 13 March 2020, rejected the asserted notional accommodation costs as benefit; on 18 May 2020 it made a confiscation order for £200.

• Highbury Corner Magistrates’ Court: on 27 July 2018, convicted the respondent of offences concerning the Seven Sisters Road premises and rejected his reasonable-excuse defence.