Sheikh, R. v

SIR DOUGLAS BROWN: This appellant is Junaid Sheikh, who is 32 years of age. This case has an unusual history. On 6th March 2002 the appellant pleaded guilty at Snaresbrook Crown Court before Her Honour Judge Woollam to six counts of using trademarks without authority, contrary to section 92 of the Trade Marks Act 1994. His brother, Saqeb Sheikh, pleaded guilty to the same six counts and their father, Hafeez Sheikh, to two counts in the indictment. They were not arraigned on a count alleging conspiracy to defraud and that was left on the file on the usual terms. Sentence was adjourned and in April, confirmed at the end of May, it became apparent that confiscation proceedings were going to be brought. At the end of May an application was made by the prosecution for restraint orders in respect of the appellant's property with a view to those proceedings and on 25th July, having changed their legal representation, they made an application at the same court to Judge Khayat QC to be allowed to vacate their pleas of guilty. In short, fresh counsel criticised original counsel for not advising or warning that there was a risk of confiscation orders being made. Following leave to appeal from the single judge, the full court dismissed the appeal against conviction on 19th February 2004. When Mantell LJ giving the judgment of the court said this, referring to the evidence heard by Judge Khayat, he found that the appellant 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 on their acceptance of guilt. This court remitted the case to the Crown Court for sentence and for the confiscation hearings.

A contested confiscation order hearing took place in January 2005 at which the appellant and his brother gave evidence, with a ruling on February 14th and they were sentenced on February 15th as follows. The appellant was sentenced to 12 months' imprisonment on each count, those sentences to run concurrently. A confiscation order was made under section 71 of the Criminal Justice Act 1988 in the sum of £84,548 with six months to pay that amount, with a consecutive term of two years' imprisonment in default of payment. He was also ordered to pay £25,000 towards the prosecution costs to be paid in three months. A forfeiture order was made in respect of a large number of mobile phone fascia covers and other items. He now appeals against sentence and the confiscation order with the leave of the single judge.

His brother was sentenced to two years' imprisonment on each count to run concurrently and he was ordered by way of confiscation to pay £36,328 with 18 months' imprisonment in default and the same order as to costs was made in his case. His father was sentenced to 12 months' imprisonment in each count, those sentences being suspended for two years, and a confiscation order of £389,121 was made in his case with four years' imprisonment in default. He was ordered to pay the same amount in costs. We have no information about the father. It appears that recently the brother lodged a notice of appeal out of time.

The circumstances of these offences were these. The appellant, together with his co-accused, traded under the name of Nadir Traders and subsequently Nadir Traders Limited. The business operated from a business estate in Walthamstow selling mobile phone accessories wholesale. The business described itself as "The UK's largest importer and wholesalers of mobile phone accessories." The goods comprised counterfeit mobile telephone covers bearing the registered trademark of several famous brands made in the Far East, the designs provided by Nadir; counterfeit Nokia phone covers and counterfeit Nokia, Ericsson and Motorola batteries and chargers. In addition there were legitimate accessories such as aerials and car kits.

The appellant's brother had established the business in May 1999 and dealt in ready-made counterfeit products soon after. The appellant began working in the business from 15th May 2000 and his father on the following day. The appellant's brother remained in charge of the business with the appellant as his deputy and with the father's main responsibility being bookkeeping.

From September 2000 the business commissioned counterfeit parts to its own design. The appellant was left in charge whilst his brother travelled to the Far East. The business attempted to conceal the fact that they were commissioning counterfeit goods by the fiction that other companies were responsible.

In December 2000 the business was incorporated. The appellant became a director and the father company secretary. It continued to trade until shortly after the raids by Trading Standards Officers in December 2001. The Crown alleged that during its two year life the business grossed approximately £3.7 million and sales were subsequently agreed at £3.2 million. At an earlier stage sales of over £11 million were calculated by a Trading Standards Officer who by the time of the hearing had left the employment of the local authority and did not play an active role in the hearing. The takings were channelled through the father and paid into various bank accounts.

On 22nd February 2001 Trading Standards Officers in Croydon had seized a quantity of counterfeit mobile telephone covers from a market stall and enquiries revealed that these covers had originated with Nadir.

On 10th May 2001 Mr Sharp, that is the Trading Standards Officer we have already referred to, with the London Borough of Waltham Forest, executed a search warrant at the Nadir premises. The premises on the ground floor consisted of a small public counter behind which telephone parts were stored on racking. A majority of those on public display were genuine. One customer was found to have purchased 50 counterfeit covers. The appellant's brother indicated that the counterfeit accessories were kept on the upper floor of the premises. A search upstairs revealed a storeroom containing 4,850 counterfeit covers, 300 counterfeit blister packs, 200 counterfeit batteries and sheets of over 250 counterfeit battery labels. An office on the ground floor contained a computer. The appellant and his brother provided a floppy disk containing 50 invoices setting out sales of £40,903. There were three invoices dated 25th, 26th April and the remainder dated 26th March. There were sales books giving other details. Documentation was also seized on the premises showing transactions with manufacturers of counterfeit goods in the Far East from 27th April 1999 onwards. The appellant acted as a point of contact with an agent in Taiwan who was employed as liaison with the factories producing the goods. She was dismissed in September 2000 for not working hard enough. The documentation revealed that Nadir used three air cargo companies to convey counterfeit goods. Partial documentation revealed that Nadir purchased £700,000-worth of stock between May 1999 and May 2001.

At first all three accused declined to answer questions in interview. On 4th July 2001 the appellant requested a further interview. He stated that the business held over 200,000 items in stock, only a small proportion of which comprised batteries and covers. He had only recently joined the business and was mainly responsible for the computer system. His brother ran the business although the appellant accepted that he assumed responsibility when his brother was away. He accepted that the covers were made to Nadir's design and these designs incorporated famous brands. He thought there was nothing wrong with this so long as the companies did not make their own covers. He could not explain why the counterfeit Nokia products or the sheets of counterfeit labels came to be there. There was no written basis of plea.

On the question of sentence, Mr Palmer of counsel, who appeared before Judge Khayat, accepted for the appellant that for what could only be described as serious commercial trading offences substantial custodial sentences had been imposed and approved in this court for similar trademark frauds. By way of example, the case of Davies [2003] EWCA Crim. 3110 where a sentence of three-and-a-half years' imprisonment was upheld and Ansari [2000] 1 Cr.App.R (S) 94, the bracket of sentencing was two to three years, a case not similar to this.

Counsel for the respondent, Mr Groome, has helpfully provided a schedule with reports exhibited to it of the levels of sentencing in a large number of cases and they indicate that the level of sentencing, apart from the minor cases, is of the order of between two and four years' imprisonment.

Mr Palmer says firstly here, and this is his main point, that there was no credit given for guilty pleas because of the attempt to vacate the plea and set aside the conviction. It is true that the judge said that he took it into account but he was dismissive of the effect of the pleas of guilty discounting the sentences because of that circumstance. Mr Palmer also submitted that the appellant had been sentenced on the wrong factual basis. The judge said that he did not regard the six counts as specimen counts and the sentences he imposed were sentences for a course of conduct over two years. Next, Mr Palmer said that the personal mitigation of this appellant should have resulted in either a non-custodial sentence or even at this stage from this court a suspended sentence. He was a man of good character and indeed positive good character because he had worked for charities. He had been co-operative with the investigating authority and more particularly he was extremely well-qualified as a teacher. He had gained a PHD in chemical engineering from Imperial College and at the time of sentencing and for some time before that had been employed as a science teacher at the Langdon School in East London. He furnished to the sentencing judge, and we have seen them, references from the head teacher of that school and the assistant head teacher which speak of him in glowing terms as a teacher and pointing out the difficulty of recruiting high calibre teachers such as the appellant in London and particularly in science. Mr Palmer made a strong submission to the judge based on that, that society would be better served by this appellant returning to teaching rather than receiving a custodial sentence. His present position is, we are told, that he has not yet decided whether to seek to return to teaching when he is released because of the considerable adverse publicity that this case has engendered.

We have considered those submissions. It is not altogether easy to understand why the judge treated these counts not as specimen counts. This ran completely contrary to the way the defence ran the case throughout including the confiscation proceedings. The evidence of the appellant and the reports of his expert accountant, Mr de Nahlik, were directed at meeting the Crown's evidence of the scale of trading and resultant benefit over two years. The appellant gave evidence over two days before the judge and as we understand it it was not once suggested that the confiscation amount might be limited to six individual instances in May 2001.

The judge in sentencing did say that he was treating these offences not as specimen counts but he prefaced that by saying that he was going to sentence the appellants for their conduct over a two year period and he indicated that he had to regard their conduct over a long period to take that into account. That is why we indicate that we do not entirely understand what the judge said about specimen counts, but it can have come as no surprise to the appellant or his advisers that he was being sentenced for dishonest trading over a period of two years.

This was, in our view, clearly a case for immediate custody. The sentence imposed was well below the level of sentencing in this class of case and we feel that the judge must have taken into account his substantial mitigation in reducing the sentence. He was not entitled to very much credit for his plea of guilty. Mr Palmer did not argue for the full one-third but said it should be appreciable. In our view, although the judge did not address this point specifically, we think that some credit must have been given to produce a sentence as lenient as 12 months' imprisonment. We take into account the strong personal mitigation that this appellant had but it does not, in our view, amount to an exceptional circumstance which would have justified a judge or this court in suspending the sentence. In the result the appeal against sentence fails.

We turn to the confiscation order. This order was made after a long and thorough investigation by the judge following expert evidence for the Crown and for the appellant. The question for the court was: had the Crown satisfied the judge that the appellant had benefited from any criminal conduct?

In summary, it was agreed between the financial witnesses that the turnover of the business over two years was £3.2 million. This was not, however, the benefit to the appellant, his father and his brother because it was accepted that there were genuine sales. Indeed it was agreed, and the judge acted on this, that the bulk of the sales were genuine sales. The dispute lay in the percentage of dishonest sales or "trademark breach trade", as the experts described it. An important consideration for the judge and for this court is the burden on the Crown to satisfy itself as to the amount of benefit and the burden by statute is the Civil standard of proof. The Crown's expert at the hearing was another Trading Standards Officer Mr Terrell. Mr Sharp, his predecessor, had put forward a figure of 52.8 per cent of the sales being definitely legal and 6.6 per cent as definitely illicit. The remaining 40.6 per cent may have been illicit. Mr Terrell invited the court to take a medium ration between the minimum and maximum proportion of disputed sales, which was 20.3 per cent, to which should be added the 6.6 per cent agreed illicit sales. Mr de Nahlik contended for the figure of 6.6 per cent because the figure could be proved with certainty.

The judge having heard all the evidence was satisfied that there were substantial illicit sales. He accepted Mr Terrell's approach and found that the benefit for the three defendants was £860,800 or 26.96 of the £3.2 million. The defendants then agreed amongst themselves in what proportion they would bear that amount and the appellant's share and the amount of the order was £84,548.

Mr Palmer submit that this decision by the judge was Wednesbury unreasonable. It was an irrational approach by the judge. Mr de Nahlik was much better qualified than Mr Terrell and should have been preferred. We have to say that we do not agree. After his consideration of much evidence, oral and written, the judge was satisfied that the illegal trade was substantial. We see nothing irrational in his preference for Mr Terrell's approach which produced a percentage which itself was substantial. On the judge's view of the evidence it may even have been generous to the appellant and his co-defendants. The appeal in respect of the confiscation order therefore fails.

The last matter that has to be considered is the question of time to pay. As we have said, the judge gave six months in which to pay the confiscation order amount and three months in which to pay the costs. Mr Palmer, in a sensible and practical submission, has pointed out that there are considerable difficulties in selling a house - which will be the only way in which these amounts can be met - when the vendor is in prison, when time is short and the best price may not be easily achievable in the short-term.

We think that there is force in that and we propose to vary the order made by the learned judge to an order of 12 months from the date of sentence, 15th February 2005, in respect both of the confiscation amount and the award of £25,000 costs. To that limited extent this appeal succeeds.