Davies v London Borough of Waltham Forest

On 23^rd November 2001 at the Crown Court at Snaresbrook before His Honour Judge Bing the appellant pleaded guilty to an indictment containing 13 counts. Counts 1-9 were of a similar nature. They all alleged that the appellant

“With a view to gain and with a view to sale or distribution for sale, having possession, custody or control in the course of a business, of goods bearing a sign identical to or likely to be mistaken for a registered trade mark, without the consent of the proprietor, contrary to S92(1)(c) of the Trade Marks Act 1994.”

The particulars of each of the offences on counts 1-9 asserted that different items were in the appellant’s possession with a view to sale or distribution bearing a sign identical to certain registered trade marks. Thus for example on count 1 the particulars of offence were:

“Derrick Davies on 8^th December 1998 at 44a Argall Avenue, Leyton Industrial Village, London E.10. in the course of business with a view to gain for himself and without the consent of the proprietor you had in your possession, custody or control with a view to sale or distribution for sale a wristwatch bearing a sign identical to, or likely to be mistaken for, a registered trade mark, namely the Adidas mark.”

Count 2 related to a blue shirt with a Hugo Boss mark; count 3 a toilet bag with a Burberry mark; count 4 a stripped pique shirt with a Fila mark; count 5 a navy blue zipped jacket with Tommy Hilfiger mark; count 6 a leather jacket with a Kickers mark; a black nylon jacket with the Ralph Lauren mark; count 8 a black nylon jacket with the Nike mark; and count 9 a wristwatch bearing a Reebok mark. Counts 10 and 11 charged offences under S92(2)(c) of the 1994 Act related to packaging material bearing a sign identical to or likely to be mistaken for certain registered trademarks.

Counts 12 and 13 alleged offences under S92(3)(b) of the 1994 Act and related to computer discs in the possession of the defendant designed or adapted for making copies of signs identical to or likely to be mistaken for certain registered trade marks.

S92 of the Trade Marks Act 1994 provides as follows:

It will be seen that the counts did not allege in relation to the individual items the subject of counts 1-9 “the selling or letting for hire, offering or exposing for sale of goods which bear a sign” contrary to S92(1)(b). Nor (though significantly) so far as counts 10 and 11 are concerned did the counts allege under 92(2)(b) the using in the course of a business material bearing such a sign for labelling. Nor so far as the computer discs the subject of counts 12 and 13 were concerned was there alleged that any articles had contrary to S92(3)(b) been made, designed or adapted for making copies of a sign. The allegation in all cases as accepted by Mr Groom for the Crown before us was that on a particular day in all cases 8^th December 1998 (the date when the appellant’s premises were raided) the appellant had the particular items in his possession with a view to gain.

When sentencing the appellant on 17^th January 2002 the judge said this:

“It is common ground that the indictment to which the defendant pleaded guilty is a specimen indictment. The indictment, counts 1 to 9, represent counterfeit watches; counts 2 and 4 to 8 counterfeit garments; count 3 a bag and count 11 a label. The only counts which are not specimen counts are counts 12 and 13 which fully represent the offences in relation to the computer disc. The indictment is a sample of a total of 5,429 counterfeit items, 86,000 counterfeit labels, 11,000 price stickers, some of which prices were in dollars as well as pounds. There were 140,000 counterfeit plastic bags found when the defendant’s premises were raided in December of 1998.

The premises were exclusively a dishonest and illegal business devoted to counterfeiting. …..”

The judge then identified his approach to sentencing by reference to certain questions. The third question which he posed to himself was:

“What was the actual or likely profit?”

His answer to that question was (see 4b of the sentencing remarks):

“The agreed basis upon which sentence should be passed is that in the period of trading, which was a period of about eighteen months from June 1997 to December 1998, the turnover was in the region of one million pounds. I conclude from that the profits would have been considerable.”

He then sentenced the appellant to three and a half years concurrent on each of the counts of the indictment. There was then an offence under the Bail Act for which he passed a consecutive sentence of 6 months making 4 years in all.

That sentence followed a Newton hearing at which the Crown were contending that the turnover of the appellant’s business was over £1.5 million and at which a compromise was reached under which it was agreed that the judge should assess the turnover as £1million, the figure appearing in his sentencing remarks.

The sentence of imprisonment is not challenged on this appeal. The prosecution had served a notice under S71 of the Criminal Justice Act 1988 giving notice that the court should consider whether it was appropriate to make a confiscation order under the relevant legislation. Once a notice is served S71(1)(a) requires a court to determine first whether the offender has benefited from any relevant criminal conduct. Under subsection 1B subject to subsection 1C (which does not apply in this case) if the court determines that the offender has benefited from any relevant criminal conduct it shall then (a) determine in accordance with subsection 6 below the amount to be recovered in his case by virtue of this section and (b) make an order under this section ordering the offender to pay that amount. Subsection 1D provides:

“In this Part of this Act “relevant criminal conduct….. means (subject to section 72AA(6) below) that offence taken together with any other offences of a relevant description which are either-

(a)

offences of which he is convicted in the same proceedings, or

(b)

offences which the court will be taking into consideration in determining his sentence for the offence in question.”

Subsection 6 requires an order to be made by the court requiring an offender to pay either the benefit or the amount appearing to the court to be the amount that might be realised at the time the order is made whichever is the less.

The reference to S72AA(6) is important. Under S72AA if a notice is served pursuant to that section and provided certain conditions are satisfied the court may make assumptions that property in the possession of the defendant has resulted from criminal conduct to which the confiscation provisions will apply. These are called the extended benefit provisions.

The court will however only have jurisdiction under S72AA if:

“(a)

the prosecutor gives written notice for the purposes of subsection of 1A of section 71 above;

(b)

that notice contains a declaration that it is the prosecutor’s opinion that the case is one in which it is appropriate for the provisions of this section to be applied; and

(c)

the offender

(i)

is convicted in those proceedings of at least 2 qualifying offences (including the offence in question); or

(ii)

has been convicted of a qualifying offence on at least one previous occasion during the relevant period.”

Subsection 2 of 72AA provides:

“In this section “qualifying offence” in relation to proceedings before the court ….. means any offence in relation to which all the following conditions are satisfied that is say

(a)

it is an offence to which this part of the Act applies;

(b)

it is an offence which was committed after the commencement of section 2 of the Proceeds of Crime Act 1995; and

(c)

that the court is satisfied that it is an offence from which the defendant has benefited.”

Subsection (6) of 72AA provides:

“Where the assumptions specified in subsection (4) above are made in any case, the offences from which, in accordance with those assumptions, the defendant is assumed to have benefited shall be treated as if they were comprised, for the purposes of this Part of this Act, in the conduct which is to be treated in that case, as relevant criminal conduct in relation to the defendant.”

So far as benefit is concerned S71(4) provides that:

“For the purpose of this part of this Act a person benefits from the offence if he obtains property as result of or in connection with its commission and his benefit is the value of the property so obtained.”

The confiscation proceedings before the judge were conducted on the basis that all the conditions by reference to which the court might have jurisdiction under S72AA had been complied with. In particular there was no contest that the court was dealing with two qualifying offences so far as the appellant’s plea of guilty was concerned. There was no contest that the court should be satisfied that the qualifying offences were ones from which the defendant had benefited. There was no contest that that benefit was a result of or in connection with the commission of the relevant offences.

Thus it was that the judge in giving his judgment in relation to the confiscation said at 11F:

“Simply stated, the law is (1) it is for the prosecution to prove benefit. In this case, it is agreed by both sides that the benefit figure is one million pounds.

That figure came about in this way. Prior to sentence, I was invited to hold a Newton hearing to determine the turnover over a period in the specimen indictment in counterfeit trading. The prosecution were contending for a figure higher than one million, the defence was arguing for a figure very much lower.

After two days of evidence, the parties each invited me to pass sentence on the basis of a turnover of one million. In fact, this was the figure I would probably have arrived at myself if I had had to decide the Newton issue. Sensibly, both Mr Groom and Mr Rose have agreed, putting legal niceties to one side that one million pounds should be the benefit figure for these proceedings.”

Mr Rose who appeared below and appeared for the appellant on this appeal has however argued that any concession made in the court below went to jurisdiction and he should not be bound by it. He submits that on analysis of the indictment there are not two qualifying offences within S72AA in that none of the offences are ones in relation to which the appellant obtained any benefit. He submits that in relation to all counts on the indictment they simply assert that the appellant was in possession of certain items “with a view” to making a gain. He submits that it would have been possible to charge the appellant with selling or otherwise actually gaining from the sale or use of the items the subject of the counts but since the Crown did not choose so to do the position is that no benefit was obtained.

The Crown’s submission is that this places too narrow interpretation on the word “benefit”. The Crown stress that S71(4) provides that a person benefits from an offence if he obtains property both “as a result of” or “in connection with” its commission.

The Crown relied on two authorities R v David Cadman Smith [2002] 2 Cr App R(s) 144 and R v Wilkes [2003] EWCA 848. In the first the House of Lords were dealing with S71(5) and the question whether the defendant in that case had obtained a pecuniary advantage. The House of Lords ruled that in relation to a conviction for evading duty the defendant in that case had obtained a pecuniary advantage once duty had been evaded even if the goods were thereafter seized by the Customs and thus not sold by the defendant. Lord Rodger of Earlsferry commented at the end of his speech:

“I am accordingly satisfied that the decision of the Court of Appeal on this point was wrong. It is worth adding that, if adopted, their interpretation would go a long way to making the confiscation provisions ineffective against smugglers. After all, there would be few, if any, cases where Customs officers will fail to seize contraband goods which they find in the hands of smugglers. The decision of the Court of Appeal would mean that any such case, for the purposes of S71(5), the smugglers would derive no pecuniary benefit from evading the excise duty and so no confiscation order could be made against them. Fortunately the terms of the legislation do not lead to that result.”

In Wilkes the Court of Appeal was concerned with S71(4). They followed the reasoning of the House of Lords in R v David Cadman Smith and held that a burglar who takes property from a house which is then immediately seized still obtains a benefit to the extent of the value of the property. Gross J in delivering the judgment of the court and giving the reasons for the court’s view as to the proper construction of the statutory provision said this:

“(1)

Section 72AA of the Act can be draconian in accordance, we think, with the intention of Parliament. As Lord Rodger observed in paragraph 23 of his speech in Smith (David Cadman) in the House of Lords:

“That may not be out place in a scheme for stripping criminals of the benefits of their crime.”

(2)

The applicability of section 72AA of the Act is triggered by the commission of the qualifying offences; their “success” or otherwise is irrelevant.

(3)

Once section 72AA is triggered, and if the assumptions are made, the property to be confiscated need not be as counsel for the Crown had put in his skeleton argument, “referable to any particular piece of criminality”, let alone a “successful” outcome of triggered offences; were it otherwise the purpose of the statutory scheme could readily be defeated.

(4)

The provisions are compatible with convention rights because any serious or real risk of injustice can be avoided either by not making the assumptions or by disapplying them. We turn to the interpretation of S71(4). Viewed in this context we have no doubt that section 71(4) is to be interpreted as meaning what it says without any gloss. When the appellant had completed committing the trigger offences he obtained property – that he was unable to realise that property because of police intervention is irrelevant, as it would have been if the property had been destroyed by fire or in some other accident. ….. ”

It follows from the above authorities that the fact that the appellant in the instant case was not charged with having sold or disposed of items bearing false trademarks is not the end of the matter. The question is whether the items that bear false trademarks or which enable false trademarks to be applied to goods are “property” and whether they have been obtained in connection with the commission of the relevant offence.

Mr Rose suggested that to decide that these items had been obtained in connection with the offence in this case would lead to the provisions of the Criminal Justice Act 1988 being used in many circumstances where Parliament simply cannot have intended them to apply. He thus for example suggested that in relation to the evasion of duty cases Parliament cannot have intended the provisions to apply to the cigarettes bought outside the country and bought for the purpose of evading duty although loosely it could be said that such cigarettes were property obtained in connection with the commission of the offence.

It is unnecessary in our view to deal with the question whether the cigarettes in the evasion of duty case would be property obtained in connection with the commission of the offence of evading duty. This is not a case where the Crown rely on the obtaining of the original garment or watch or computer disc or labelling machine. This is a case in which those items have been adapted either by the application of a false trademark or by their capability to produce false marks. Their value was certainly intended to be enhanced thereby. The reality is that certainly so far as counts 1-9 were concerned these trademarks were being stolen by this appellant and applied to the items. There is very little distinction between that act and the act of the burglar who takes property from a house which is then immediately seized.

We accordingly also think that there is no reason to gloss the provisions of S71(4). If one asks whether the wristwatch with the Adidas mark was property obtained by this appellant in connection with the commission of the offence with which he was charged the answer appears to us to be it was. In one sense “with a view to gain” demonstrates that the property bearing the false trademark had a value which was of benefit to the appellant and thus there is no reason why S71(4) should not be construed as to apply to it.

Thus as it seems to us the judge did have jurisdiction. There were at least two qualifying offences. There is no dispute that if that be so having regard to the concession made below the appropriate figure for benefit is the £1million.

The next point relates to whether the judge was right to hold that the appellant had a 100% interest in a property “Hillcrest” which was occupied by himself and his former wife Susan Cook. She was the registered legal owner. However the judge found that the appellant using the proceeds of his illegal operations provided 100% of the money for the purchase.

Mr Rose both before the judge and before us sought to rely on S74(1) and S74(10) which provide:

“Definition of principal terms used

74.— (1)  In this Part of this Act, "realisable property" means, subject to subsection (2) below— (a)  any property held by the defendant; and (b)  any property held by a person to whom the defendant has directly or indirectly made a gift caught by this Part of this Act. (10)  A gift (including a gift made before the commencement of this Part of this Act) is caught by this Part of this Act if— (a)  it was made by the defendant at any time after the commission of the offence or, if more than one, the earliest of the offences to which the proceedings for the time being relate; and (b)  the court considers it appropriate in all the circumstances to take the gift into account.”

It was Mr Rose’s submission before the judge and before us that S74(10) was designed to deal with precisely the situation that has occurred in this case but that by virtue of the fact that this house was purchased prior to the date of the offence in this case the house is not caught by the provisions of S74(10).

Mr Groome for the Crown accepted both here and below that if this house was a gift within the meaning of S74(10) then it would not be caught by virtue of the provisions of that Act having regard to the date when the property was transferred to Miss Cook. The judge looked at the matter this way:

“The relevant date for the interpretation of section 74(10) must be 8^th December 1998 because that is the date on all the counts of the specimen indictment to which the defendant pleaded guilty. The defendant admitted, for the purposes of sentence, that the indictment was a specimen indictment of offences committed over a period of 18 months, beginning in June 1997. Parliament, in my judgment, cannot have intended to preclude me, in these circumstances, from looking at the true nature of the defendant’s intentions during that period.

The events of that period have been the subject of intense scrutiny and cross-examination by the Crown. In my judgment, the answers given by the defendant and his mother as to what occurred at that time are relevant. The Crown rely on the answers given to submit that the evidence is not true that gifts were made. The Crown submit the intention was to disguise his assets by placing them in the name of his wife.

In my judgment, the court is entitled to consider whether the evidence is true and to assess the true intentions of the parties. If, on the facts, I was to conclude that there was not a real intention on Davies’s part to make a genuine gift to his wife in the relevant period, I would be entitled to conclude that no gifts were made.”

It may be that the judge’s approach at the beginning of that quotation could be criticised. It was in fact not truly relevant if he was performing an exercise under S72(a)(a) whether the indictment was concerned with offences committed over a period of 18 months. Nor in one sense was it by reference to the construction of S74(10) that the point should be decided. But it is clear that he directed himself properly that the true question was whether any genuine gift to the wife had been made. He further quite rightly directed himself that if there was no question of there being a gift then the property was 100% the appellant’s and the gift provisions were of no relevance at all.

Mr Rose relied upon the presumption of advancement between husband and wife and on decisions which show that it is not necessarily rebutted in circumstances where the husband has placed property in his wife’s name in order to place it beyond the reach of any future creditors: see Tinker v Tinker [1970] 1 All ER 540, and generally Harwood v Harwood [1991] 2 FLR 274, and Halsbury’s Laws volume 48 at 616.

The presumption of advancement can be rebutted, sometimes by quite slight evidence. In many of these cases, the question will be whether there is an honest and genuine transfer intending to give the wife the beneficial interest, albeit motivated by a desire to avoid the property falling into the hands of any future creditors (as in Tinker v Tinker) or whether the transfer is a sham with the true beneficial interest remaining with the husband. In the present case the judge examined the evidence in great detail and concluded that Miss Cook had not contributed from her own resources or from any gifts made to her to the purchase of “Hillcrest”. He found that:

“the proper conclusion to draw from all the evidence is that the defendant had 100 per cent interest in Hillcrest.”

In our view this was a finding that was open to the judge on the evidence and there is no basis for reversing it in this court.

In those circumstances this appeal should be dismissed.