Sheikh & Ors, R v

In February 2001 trading standards officers seized counterfeit and illicit mobile telephone facias from a market stall in Croydon. They were traced back through the wholesaler to Nadia Traders Ltd, a company with premises at Unit 30 Walthamstow Business Centre in Leytonstone.

On 10^th May the same year, trading standards and police officers executed search warrants at those premises which consisted of a ground and first floor. On the ground floor was a public counter with racks behind on which mobile telephone accessories were stored. Those telephone accessories were genuine. However, there was another storeroom upstairs where officers discovered approximately five thousand counterfeit and illicit items. On the premises were Saqeb Sheikh, Junaid Sheikh and Hafeez Sheikh, all of whom were clearly connected with the business. There were also about twelve customers including one who was detained just outside having purchased fifty of the counterfeit items.

There were four categories of illegal items;

From documents seized it was possible to piece together something of the history of the company. The premises had been leased in July 1999 by Saqeb Sheikh. To begin with he carried on business as a sole trader under the name Nadia Traders. As such he was able to purchase readymade counterfeit and illicit facias from various manufactures in Taiwan. It was clear from the correspondence that both sides appreciated that what they were doing was illegal. Accordingly the shipping documents referred to the items as ‘gift boxes’. Junaid and Hafeez Sheikh joined the business in May 2000. By October that year illicit facias were being bought from a new manufacturer in Hong Kong. A letter sent by the manufacturer to Nadia described the first shipment in October 2000 as ‘a test shipment …to test customs’. In December 2000 the business was incorporated with Saqeb and Junaid as directors and Hafeez as company secretary. It was also clear from the documents that between December 2000 and May 2001 Nadia Traders Ltd was designing, commissioning the manufacture, importing and selling counterfeit and illicit parts. Some attempt had been made to deflect interest from Nadia to another company called ‘Face Off’. The company has now been wound up.

Saqeb and Junaid Sheikh are brothers. Hafeez Sheikh is their father.

On 10^th and 11^th May 2001 Saqeb, Junaid and Hafeez Sheikh were interviewed. All three declined to answer questions.

On 4^th July 2001 Junaid Sheikh was re-interviewed. He said that Saqeb was in charge of the business but that he stood in when Saqeb was away. The facias were made by various manufacturers to Nadia’s order and design and that Nadia was responsible for importing the various items. He knew that the designs incorporated the trademarks of various well-known brands but thought there was nothing wrong about that. He suggested that the counterfeit parts had been delivered by mistake.

Hafeez was re-interviewed on the same date. He admitted to being the bookkeeper and helping out on the sales desk when needed. In common with Junaid he admitted that the facias were made to Nadia’s order and design and that he knew that some of the trademarks were of well known brands but he considered that there was nothing wrong about that so long as the brand owner did not actually produce mobile telephone accessories.

In that connection it should be noted that it is a defence under the Act for a defendant to show that he believed that he was entitled to use the trademark in the manner complained of and that his belief was based on what might be considered objectively reasonable grounds.

As a result of what had been discovered all three eventually appeared before the Crown court at Snaresbrook to face an indictment containing seven counts. Count one charged conspiracy to defraud. Counts two to six inclusive charged using a trademark without authority contrary to section 92 (1) (c) of the Trade Marks Act 1994 and count seven charged using a trademark without authority contrary to section 92 (1) (b) of the same Act, the difference being that (c) charges possession of goods and (b) selling goods bearing a false trademark. All three were represented by Mr Munro of counsel. Hafeez Sheikh pleaded guilty to two counts of using a trademark without authority contrary to section 92 (1) (c) and Saqeb and Junaid Sheikh pleaded guilty to the five counts laid under the same section. Those pleas proving acceptable to the Crown, the remaining counts were ordered to lie on the file on the usual terms.

The sentence of all three was put back and on 31^st May 2002 the Crown served a restraint order which made plain its intention to pursue confiscation proceedings. That in turn prompted applications on behalf of all three to vacate their pleas of guilty. The hearing was conducted before His Honour Judge Khayat QC on 25^th July 2002. After hearing evidence and argument His Honour Judge Khayat refused the applications. All three sought leave to appeal.

The single judge granted leave on one ground only, namely that given no warning had been given of the possibility of confiscation proceedings it was arguable that His Honour Judge Khayat should have allowed the pleas to be vacated.

So it was that the matter came before this court with counsel prepared to argue that single ground. There has been no renewed application to argue any other.

It is conceded that none of the appellants was told that there was a risk of confiscation proceedings. That emerged from the evidence of Mr Munro who was otherwise acquitted of all fault. The judge found that he had given appropriate advice as to the nature of the charges, any available defence and the likely outcome following a trial. He explained that the prosecution would only be prepared to drop the conspiracy charge if there were acceptable pleas from all three appellants. It was on that basis that certain counts including the most serious of conspiracy to defraud were allowed to remain on the file. As to Mr Munro’s failure to mention the possibility of confiscation proceedings the judge did not agree with Mr Munro that the possibility was remote. What he said was:

The case put forward on appeal is that the impact of confiscation proceedings in this case is far from peripheral. The sum of £11,000,000 has been mentioned. Faced with the possibility of confiscation proceedings none of the appellants would have pleaded guilty but would, as the expression goes ‘put himself upon his country’. Particular reliance is placed on a decision in the Northern Irish Divisional Court, Re McFarland’s Application for Judicial Review (2000) N I QBD 403. In that case the applicant had pleaded guilty having been misinformed that any other course might lead to his case being referred to the High Court where the available maximum sentence would not have been subject to the constraints placed upon magistrates.

It is well accepted that quite apart from cases where the plea of guilty is equivocal or ambiguous, the court retains a residual discretion to allow the withdrawal of a guilty plea where not to do so might work an injustice. Examples might be where a defendant has been misinformed about the nature of the charge or the availability of a defence or where he has been put under pressure to plead guilty in circumstances where he is not truly admitting guilt. It is not possible to attempt a comprehensive catalogue of the circumstances in which the discretion might be exercised. Commonly, however, it is reserved for cases where there is doubt that the plea represents a genuine acknowledgment of guilt. As was said by Lord Morris of Borth-y-Gest in the leading case of S(an infant) v The Recorder of Manchester (1971) AC 481 at 501:

And in any event authority shows that the discretion to allow a change of plea from guilty to not guilty must be exercised sparingly. (see the observations of Lord Upjohn in S (an infant) v The Recorder of Manchester at p.507 and those of Lord Lane CJ in Drew (1985) 1 WLR 914 at p.923.).

Here, as noted, the judge heard evidence from counsel representing the appellants at the time when the pleas of guilty were entered. He found that the appellants had been properly advised as to the nature of the offences and what it was necessary for the prosecution to prove before they could be found guilty. He further found that by their pleas the appellants were freely confessing their guilt. The only matter of which they had not been informed was, following conviction, the possibility of confiscation proceedings taking place. That, of itself, could have no bearing upon their acceptance of guilt. For these appeals to succeed it must be shown that the judge misdirected himself or took account of matters which he should not have taken account of or failed to take account of matters to which he should have had regard or that he exercised his discretion in a wholly unreasonable manner. In the judgment of this court the appellants have failed to demonstrate any of the above flaws. Accordingly these appeals fail.