Jersey Unreported Judgments

2000/166

7 pages

ROYAL COURT

(Samedi Division)

 

16^th August, 2000

[Judgment in Muren delivered on 7th August, 2000;

Judgment in Peters read by the Deputy Bailiff, on behalf of

the Bailiff on 16^th August, 2000.]

 

Before: Sir Philip Bailhache, Bailiff

and Jurats Le Ruez and Le Breton

 

 

The Attorney General

-v-

Julie Carole Muren;

Mark Alistair William Peters.

 

 

Julie Carole Muren (née Reidy)

 

3 counts of:  contravening Article 14(1)(a) of the Housing (Jersey) Law, 1949, by failing to comply with a condition imposed by the Housing Committee to a consent to the joint purchase by herself and her husband of property, stipulating that the said property should not, without the consent of the Committee, be let unfurnished to or be occupied by persons other than those approved by the Committee as falling into a category specified in Regulation (1)(a)-(h) of the Housing (General Provisions)(Jersey) Regulations, 1970 (counts 1, 3 and 4).

 

2 counts of:  contravening Article 7(1) of the Housing (Jersey) Law, 1949, by leasing premises without the consent of the Housing Committee previously obtained (counts 2 and 5).

 

Age:   33.

 

Plea:   Facts admitted.

 

Details of Offence:

 

Acquisition of property in May, 1999, following issue of housing consent with usual occupancy conditions.  In July 1999, breaches of conditions found in occupation of five units of the property, two of which units were wholly occupied by unqualified persons for the purposes of the Housing Law.  Owner, who did not reside at the property, received all rent directly.  No services provided.

 

Details of Mitigation:

 

Alleged reliance on estate agent on the sale of the property to the defendant that each of two residentially qualified people could take five lodgers.  No deliberate attempt to breach the Law.  Asserted that no illicit profit had been made.  Co-operation by defendant.  Charges had been hanging over her since July, 1999, and during the period since then the defendant had been pregnant and subsequently had a child.  This prosecution caused additional stress.  Defendant had given some money back to tenants.

 

Previous Convictions:

 

Sundry motoring offences; larceny (2 counts).

 

Conclusions:

 

Count 1:       £1,500 fine or 2 months' imprisonment in default of payment.

Count 2:       £200 fine or 1 week's imprisonment in default of payment, consecutive.

Count 3:       £1,000 or 1 month's imprisonment in default of payment, consecutive.

Count 4:       £1,500 fine or 2 months' imprisonment in default of payment, consecutive.

Count 5:       £2,000 or 1 week's imprisonment in default of payment, consecutive.

£500 costs.

TOTAL:      £4,400 fine or 5 months and 2 weeks' imprisonment in default of payment; £500 costs.

 

Sentence and Observations of the Court:  Conclusions granted.

 

Court indicated that the proper course in relation to illicit profits was to take into account any such profit if it was readily available.  Otherwise the Court should not engage in mathematical calculations; nor could it pluck a figure from the air.  In appropriate cases the Crown should analyse the nature and structure of the transaction to see if an illicit profit was likely to have been received.  This was not an exact science.  Purposes of the Housing Law restated.  Illicit profit is only one factor but is an aggravating factor.  If there are lettings to unqualified persons over an extended period that should be reflected in the penalty.

 

Mark Alistair William Peters

 

3 counts of:  contravening Article 14(1)(a) of the Housing (Jersey) Law, 1949, by failing to comply with a condition imposed by the Housing Committee to a consent to the purchase of the undivided share of a property, stipulating that the said property should not, without the consent of the Committee, be let unfurnished to or be occupied by persons other than those approved by the Committee as falling into a category specified in Regulation (1)(a)-(h) of the Housing (General Provisions)(Jersey) Regulations, 1970 (counts 1, 2 and 3).

 

Plea:   Facts admitted.

 

Details of Offence:

 

In breach of standard occupancy conditions, accused let three units of accommodation in a four bedroom property to persons unqualified under the Housing Regulations.   One such letting had continued for 8 years.   The fourth unit was occupied by a qualified person but over the 8 year period the identity of the qualified person had changed from time to time.   There had been occasions when the unqualified tenants had remained notwithstanding that there was no qualified tenant in occupation.

 

Details of Mitigation:

 

Alleged to be a technical offence.

 

Previous Convictions:    None.

 

Conclusions:

 

Count 1:       £4,000 fine or 2 months' imprisonment in default of payment.

Count 2:       £1,000 fine or 2 months' imprisonment in default of payment, consecutive.

Count 3:       £1,000 fine or 2 months' imprisonment in default of payment, consecutive.

£500 costs.

TOTAL:      £6,000 fine or 6 months' imprisonment in default of payment; £500 costs.

 

Sentence and Observations of the Court:

 

Count 1:       £3,000 fine or 2 months' imprisonment in default of payment.

Count 2:       £1,000 fine or 1 month's imprisonment in default of payment, consecutive.

Count 3:       £1,000 fine or 1 month's imprisonment in default of payment, consecutive.

£500 costs.

TOTAL:      £5,000 fine or 4 months' imprisonment in default of payment.

 

 

The Attorney General;

Advocate A.P. Roscouet for Mrs. Muren;

Advocate A.D. Robinson for Mr. Peters.

 

JUDGMENT

 

THE BAILIFF:

 

1.            The Court has, at the request of the Attorney General and with the consent of counsel for the defendants, heard these cases together because the same important issue in relation to sentence is raised in each case.  That issue is the extent to which the so-called "illicit profit" made by a defendant as a result of a breach of the Housing (Jersey) Law, 1949 as amended, ("the Housing Law") is relevant to the penalty to be imposed, and, if it is relevant, how it should be calculated.  Counsel agree that there appears to be no reasoned decision of the Court on this issue and the Attorney General has asked whether the Court could look at the question in some detail and give guidance for future cases.  It is clear that the Court has, on a number of occasions, regarded the supposed "illicit profit" made by a defendant to be relevant.  That is hardly surprising.  It is axiomatic that a defendant should not be allowed to profit from his unlawful activity.  In the context of certain criminal activity, the legislature has made specific provision enabling the Court to confiscate the proceeds of crime in addition to any other penalty which the Court might see fit to impose.  In the context of breaches of the Housing Law, however, when the penalty imposed is almost invariably a fine, the question is to what extent the fine should be increased to take account of any illicit profit.  In AG -v- Pennymore Investments Limited (18^th October, 1985) Jersey Unreported, the Court appears to have approached the problem by assessing the illicit profit and adding to that figure a sum to punish the defendant company for its offence.  This approach has been followed in other cases but it can give rise to difficulties, not least because there is often, as there is here, a dispute as to whether there has in fact been an illicit profit or, if there has, as to the extent of it.  Does the Court then engage in mathematical calculations, hearing expert evidence from valuers, estate managers and possibly accountants to determine what is the difference between receipts actually obtained and income which would have been received from lawful lettings, taking that difference as representing the illicit profit?

 

2.            The classic factual background is the purchase by a defendant of a property, which is then or later used for investment purposes.  The consent to the purchase will contain the standard condition in the following terms:

 

"The property shall not, without the consent of the Committee, be let unfurnished to, or be occupied by, persons other than those approved by the Committee as being persons of a category specified in sub-paragraphs (a)-(h) of paragraph (1) of Regulation 1 of the Housing (General Provisions) (Jersey) Regulations 1970, as amended and who will occupy the property as their sole or principal place of residence."

 

3.            The defendant can lawfully let the property to a qualified person.  That qualified person is entitled, as the law now stands, to take in up to five lodgers.  What frequently happens, however, in the context of these cases of housing infractions, is that the defendant lets part of the property to a qualified person and then contracts directly with unqualified persons to allow their occupation of other parts of the property.  This is frequently a more profitable exercise because, it is said, there is a greater demand from unqualified occupants and they are therefore prepared to pay a premium in terms of rent.  Such arrangements give rise to the "illicit profit".

 

4.            We agree with the Attorney General that to engage in mathematical calculations based upon hypothetical assessments of what might have been the fair rent if the property had been let lawfully, and thereby to calculate the illicit profit, is, other than in unusually straightforward circumstances, an inappropriate sentencing approach.  A proper approach, where the Court is satisfied that the defendant has made an illicit profit from the unlawful transaction, is to take that into account as a factor in the sentencing process.  The exact amount of the gain may be material if it is readily ascertainable.  If it is not readily ascertainable, the Court should not estimate the amount and impose a fine which removes that figure and adds some penalty, but the Court is entitled to take into account, without quantifying it, that there has been some profit from the unlawful activity.

 

5.            It follows from what has been stated that the Crown, in moving conclusions, should in appropriate cases analyse for the Court the nature and structure of the transaction to assess whether an illicit profit, whether determined or not, has been established.  If it has been established, then the existence of that illicit profit will be an aggravating factor to be taken into account in determining sentence.  We emphasize that sentencing is not an exact science.  We do not expect the Crown, nor the defence, to engage in complicated exercises to assess the existence or extent of an illicit profit.  If it is to be taken into account as an aggravating factor, it should be reasonably plain from the facts.

 

6.            The existence or absence of an illicit profit is furthermore very far from being the only relevant factor in determining sentence.  The broad purposes of the Housing Law are to prevent a further aggravation of the housing shortage and to ensure that sufficient land is available for the inhabitants of the island.  Where the standard condition which we have recited has been imposed, it is clearly the intention of the Housing Committee, and a legal requirement, that the whole property shall, if not occupied by the defendant, be let to a qualified person.  That does not necessarily preclude the occupation of parts of the property by lodgers of the qualified person; it does, however, preclude the letting of a part of the property to a qualified person and other parts to unqualified persons.  If such lettings to unqualified persons take place over an extended period, that will clearly be an aggravating factor, because the market will have been deprived for that period of a property available for letting to a qualified person.

 

7.            We turn now to the individual defendants.  Mrs. Muren bought, with her husband, a five-bedroomed house in March 1999 for £240,000.  The Housing consent contained the standard condition to which we have referred.  The defendant did not occupy the house, nor did she offer it for letting to a qualified person, notwithstanding that it was clearly a family home of the type which is in short supply.  Instead, she parcelled it up into five units and let different units to different occupiers.  When the Law Enforcement Officer visited the property, ten people were found to be in occupation.  Two of the occupiers had residential qualifications and the rest did not.  The defendant's explanation was that she had received advice from an estate agent that she could let the property to two residentially qualified persons and then take in five lodgers per qualified person.  The agent denies giving that advice.  Counsel for the defendant expressed her client's regret at misunderstanding the agent's advice and shock at discovering that she had broken the law.  Counsel submitted that there had been no illicit profit and that a house of this type could command a rent of up to £400 a week or £20,800 per annum.  The weekly receipts of the defendant from the different lettings totalled £575.  On an annual basis, that could have realized £29,900.  In our judgment, even on the defence figures, there was an illicit profit although, because the unlawful conduct had lasted for only eight weeks, it was in fact not large.  We accept that there was no deliberate intention to break the law, even if the defendant took no meaningful steps to ascertain what her obligations were.  She was, however, fully co-operative with the Housing Department and frankly admitted the infractions.  Counsel submitted that some allowance should be made for the ten months' delay in bringing the matter to Court.  We agree that such delays are unfortunate, but in the context of a statutory infraction of this kind, we do not propose to reduce the conclusions.  In our judgment, the Attorney General has given proper weight to all the mitigating factors, and the conclusions are accordingly granted.  Mrs. Muren is accordingly fined as follows:-

 

Charge 1: £1,500 or two months' imprisonment;

 

Charge 2: £200 or one week's imprisonment consecutive;

 

Charge 3: £1,000 or one month's imprisonment consecutive;

 

Charge 4:            £1,500 or two months' imprisonment consecutive;

 

Charge 5: £200 or one week's imprisonment consecutive;

 

Total:                   £4,400 or five months and two weeks' imprisonment in default of payment.

 

We also order the defendant to pay the costs of the prosecution, not exceeding £500.

 

8.            We turn now to Mr. Peters, who has admitted three infractions of the Housing Law by letting parts of Killarney, a four-bedroomed property in St. Saviour's Road, to unqualified persons in contravention of the standard condition to which we have already referred.  Counsel for Mr. Peters submitted that these were technical infractions for which only nominal fines should be imposed.  The basis of that submission was that when the defendant acquired the property it was already parcelled up into four units.  The defendant understood that he had to let the property to a residentially qualified person who could take in lodgers, and service the property.  Counsel submitted that that was what Mr. Peters did and that his only mistake had been to charge the residentially qualified person only for her part of the property and to collect the rents from the lodgers directly.  Just how technical the offence was, submitted Mr. Robinson, was emphasized by the fact that after these matters had come to light, Mr. Peters was able to re-negotiate the lease with the residentially qualified person, Mrs. McKenna, for the whole property at a rent of £15,600 per annum, and Mrs. McKenna then assumed full responsibility for the lodgers and for servicing the property.  The occupancy of all the units at the property remained exactly as they had been before the offences came to light; the only change was that the arrangements had been put on a proper legal footing.

 

9.            The first difficulty with this submission is that it is clear as a matter of law that the whole property was never let to a residentially qualified person.  Neither Mrs. McKenna, nor her predecessor as the residentially qualified occupant, ever enjoyed a tenancy of the whole house.  The original purported lease of the house to Mrs. McKenna contained no provision for rent, the obvious reason being that what she paid by way of rent related not to the house but to the bed-sitter which she occupied.  The "lease" was a sham and in legal terms a nullity.  In fact, Mr. Peters was operating for all practical purposes an unregistered lodging house and Mrs. McKenna was his manager.  That was not what was envisaged by the Housing Committee when it imposed the standard condition.  The condition which was imposed when Mr. Peters acquired the property required him to let the whole to a residentially qualified person.  When Mrs. McKenna saw the advertisement in the local newspaper, it was for a "one-bedroom self-contained flat with garden and conservatory....".  It is true that Mrs. McKenna has, it seems, been prepared now to take on lease the whole property and to allow parts of it to be occupied by the existing lodgers on a serviced basis.  That is a perfectly lawful arrangement.  It is also, presumably, in accordance with Mrs. McKenna's needs.  But the vice of these offences is that the procedure followed by Mr. Peters has prevented a residentially qualified person with a family from having the opportunity of taking the whole property on lease without taking in lodgers.  There has, to that extent, been an aggravation of the housing shortage, because the whole house has not been available, for a long period, for occupation by a residentially qualified inhabitant of the island.  We accordingly reject the submission that these are technical offences.

 

10.        The Attorney General submitted that there had been an illicit profit made by Mr. Peters, a submission which was strongly contested by Mr. Robinson.  It is unnecessary for us to recite the arguments; it suffices to state that we are not satisfied that any illicit profit has been established.  We accept, in mitigation, that the defendant is a person of good character, who did not intend to break the law.  He was also fully co-operative with the Housing Department.  He did not, however, seek legal advice as to his obligations and he must accept the consequences of his breaches of the Housing Law.  Counsel drew attention to the delay in bringing the matter to Court; as in the case of Mrs. Muren, we agree that the delay was unfortunate, but we do not consider it such as to justify a reduction in the fines to be imposed.

 

11.        We propose, in the light of our conclusion on the absence of an illicit profit, to modify slightly the conclusions of the Attorney General.  The defendant will accordingly be fined on Charge 1, £3,000 or two months' imprisonment in default, on Charge 2, £1,000 or one month's imprisonment, and on Charge 3, £1,000 or one month's imprisonment, all default sentences to be consecutive, making a total fine of £5,000 or four months' imprisonment in default of payment.  We also order the defendant to pay a sum not exceeding £500 towards the costs of the prosecution.

Authorities

 

 

AG -v- Pennymore Investments, Ltd (18^th October, 1985) Jersey Unreported.

 

AG -v- Pirzada (9^th October, 1998) Jersey Unreported.

 

AG -v- Santer (1^st July, 1994) Jersey Unreported.

 

Troalic -v- AG (12^th June, 2000) Jersey Unreported CofA.

 

AG -v- O'Neill (3^rd April, 1998) Jersey Unreported.

 

AG -v- K.P.G. Investments & Gibb (6^th November, 1998) Jersey Unreported.

 

R -v- Lewis (30^th November, 1965) TLR.

 

R -v- Horsham Magistrates, ex p. Richards (1982) Cr.App.R(S) 254.