Sheikh & Ors, R v [2004] EWCA Crim 492

[2004] EWCA Crim 492Case No 200204818B2, 200204823B2 & 200205088B2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM SNARESBROOK CROWN COURT
HIS HONOUR JUDGE KHAYAT QC
T20020077
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 08/03/2004
Before
LORD JUSTICE MANTELL MR JUSTICE BUTTERFIELDTHE RECORDER OF NEWCASTLE
Between
ReginaCrownHafeez SheikhDefendantSaqeb SheikhDefendantJunaid SheikhDefendantRegina- v -Hafeez Sheikh Saqeb Sheikh and Junaid Sheikh
Mr D Groome (instructed by the Legal Services Dept., London Borough of Waltham Forest for CrownMr N Gerasimidis (instructed by the Registrar) for Hafeez SheikhMr A Davis (instructed by the Registrar) for Saqeb and Junaid SheikhHearing Hearing dates: 19 February 2004
Judgment
[1]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.[2]On 10th 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.[3]There were four categories of illegal items; i. counterfeit ‘Nokia’ facias, ii. facias bearing the registered trademarks of well known brands for example Gucci, BMW and Manchester United Football Club, iii. counterfeit Motorola and Ericsson batteries and iv. counterfeit Motorola and Ericsson battery labels.[4]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.[5]Saqeb and Junaid Sheikh are brothers. Hafeez Sheikh is their father.[6]On 10th and 11th May 2001 Saqeb, Junaid and Hafeez Sheikh were interviewed. All three declined to answer questions.[7]On 4th 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.[8]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.[9]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.[10]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.[11]The sentence of all three was put back and on 31st 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 25th July 2002. After hearing evidence and argument His Honour Judge Khayat refused the applications. All three sought leave to appeal.[12]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.[13]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.[14]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:
"I do not agree with that. I think it is always a realistic possibility, but I have had to consider, ‘well in those circumstances, would that have made a difference?’ The answer is, it may have made a difference in the sense of hoping against hope that they might get off and escape confiscation, but that is not the issue in the case. The issue in the case is not the realisation that … and I will use the slang expression …’that the game is up’ and that, as a damage limitation exercise, the defendants ought to be guilty (sic) and, in those circumstances, does it help as the issue of guilt of otherwise…or lack of guilt, for that matter…that a confiscation order may be made? I take the view that it is peripheral to it; that in those circumstances, the defendants were aware of the extent of their guilt, all three of them, and that the pleas that were tendered were done freely after full and informed consultation."
[15]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.[16]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:
"Guilt might be proved by evidence. But also it may be confessed. The court will, however, have great concern if any doubt exists as to whether a confession was intended or as to whether it ought really ever to have been made."
In R v South Tameside Magistrates’ Court ex parte Rowland [1983] 3 All ER QBD 689 the applicant had pleaded guilty before magistrates to burglary and asked for other offences to be taken into consideration but on being told that a custodial sentence was being considered and having obtained legal advice sought leave to change her plea. The magistrates found that the original plea had been unequivocal and that the likely reason for wishing to change it was to avoid a custodial sentence. The application was refused. The Divisional Court dismissed her further application for certiorari on the basis that the magistrates were entitled to exercise their discretion not to allow the applicant to withdraw her unequivocal plea of guilty and in so doing Glidewell J (as he then was) made the following observations:
"That being so, I come to counsel’s second point: did the magistrates exercise their discretion judicially? It is quite clear that they did exercise their discretion. They gave the matter anxious thought, having received proper advice. There may well be instances where it becomes entirely apparent from something said to the defendant before the magistrates that he or she had misunderstood the nature of the offence. It seems to me that R v Durham Quarter Sessions, ex p Virgo [1952] 1 All ER 466, [1952] 2 QB1 was probably such a case where, after pleading guilty to receiving stolen goods, a defendant (using O’Connor J’s example in P Foster (Haulage Ltd v Roberts [1978] 2 All ER 751 at 755), later says something which indicates quite clearly that he did not know the goods were stolen. Then it may very well be that, albeit it would be within the magistrates’ discretion whether to allow the plea to be withdrawn or not, in normal circumstances the discretion would only be exercised one way. But this present case is not such a case at all. The magistrates, in my view rightly, balanced the instructions which the applicant had given to her solicitor after 20 October against the prospect that she was changing her story because of the possibility that she might be sentenced to a custodial sentence. They were, in my view, perfectly entitled to come to that conclusion to which they did come and they were thus perfectly entitled to exercise their discretion not to allow the plea of guilty to be withdrawn. With that exercise of discretion, this court therefore cannot interfere."
And on closer analysis it appears that the decision in Re McFarland was founded upon concern that the applicant was not truly admitting his guilt or, put another way, that his mind did not go with the plea. As Caswell LCJ said at 409:
"The conviction in the present case is flawed, because it rests upon a plea of guilty which was vitiated by the lack of true consent on the part of the applicant brought about by misapprehension stemming from the magistrates discussion with counsel."
[17]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.).[18]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.

Cited in 5 later judgments