Confiscation of £174,000 due to Illegal Shisha Cafe Reinforces the Importance of Landlord Responsibility

A Shisha cafe based in Manchester breached a planning enforcement notice, forcing its landlord, T&M Property Investments Limited, to pay back £174,000 under the Proceeds of Crime Act. 

The Dubai Cafe caught the attention of enforcement officers when they realised that the cafe was also being used as a shisha bar, despite a lack of necessary planning permissions. Physical changes had also been made without the appropriate planning permissions.

Therefore, Manchester City Council issued an enforcement notice, ordering the cafe to cease operations and remove all works that had no planning permissions. However, the property was still being used as a shisha cafe a few years later. 

The maintenance of the cafe and its unsanctioned works proceeded, despite both the tenant and the landlord – T&M Property Investments Limited – being aware of the council's enforcement notice. The landlord, who held a 999-year lease, continued to allow the tenant to operate with no planning permissions and only took action when prosecuted by Manchester City Council. 

Whilst the deliberate breaches and neglect of planning permissions are not usually considered a criminal offence, failure to adhere to enforcement notices or any stop order can expose a person to criminal liability under the Town and Country Planning Act 1990. When calculating the amount of the fine, the Court will consider any financial benefit made from the offence.  

T&M Property Investments Limited, having been found guilty of planning-related offences at Manchester Crown Court, has incurred a fine of £18,750 and an order to pay the City Council's costs of £5,700. More notably, they must pay back an additional £174,074 under the Proceeds of Crime Act 2002, representing the rental income they received from when the enforcement notice was served to when they ended the tenant's occupation.  

The Proceeds of Crime Act allows anyone who has profited from a crime to hand over the proceeds within three months or risk imprisonment. In this case, the judge ordered that the landlord was liable and ruled to confiscate the rental income.   

This case also highlights that landlords can't hide behind their tenants – they will be held responsible for criminality in their property. 

"Landlords should act swiftly if any breach is discovered," explained Property Litigation expert Helen Porter at Warner Goodman. "The Proceeds of Crime Act does not require proof of the landlord's dishonesty; any awareness or suspicion of criminal conduct, which generated income to fund the rental payments, is enough to bring charges against the landlord."

This case is a prime example of why keeping on top of your property portfolio is essential. Failure to comply can result in catastrophic damages financially and could result in imprisonment. For more information or advice on the legalities of managing commercial properties, please get in touch with us on 023 8063 9311 or email enquiries@warnergoodman.co.uk.