England and Wales Court of Appeal (Criminal Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM BIRMINGHAM CROWN COURT
HHJ Everard
S20050140

		Royal Courts of Justice Strand, London, WC2A 2LL
		21/12/2007

Lord Justice Toulson:

1. This is an appeal by the prosecution from a confiscation order.
2. Mr Ram runs a family business called PR Textiles. PR were the initials of his late father, Phunam Ram, who started the business but died in 1998. The nature of the business is the manufacture and wholesale marketing of clothing. It is carried on from a large warehouse in Cliveland Street, Birmingham.
3. On 6 and 10 October 2003 trading officers visited the premises and seized a number of counterfeit items. On 4 March 2005 Mr Ram pleaded guilty at Birmingham Magistrates Court to three offences under s 92(1)(c) of the Trademarks Act 1994. The charges were that with a view to gain for himself or another, or with intent to cause loss to another, and without the consent of the proprietor, he had in his possession, custody or control in the course of business goods bearing a signal identical to, or likely to be mistaken for, a registered trademark, with a view to selling the goods. The charges related to an item of clothing marked NY (a baseball cap) and items of clothing marked Tommy Sport (a pair of jogging bottoms and a jacket). The charges were specimens in the sense that there were a number of items of each kind. It appears to have been common ground at the confiscation proceedings that their value was £1,334.54, and that was the amount of the confiscation order made.
4. Mr Ram had two sets of previous convictions for trademark offences, which came to court in reverse order. In 1998 he and a Mr Beghal were involved in an enterprise in which staff were employed to manufacture counterfeit clothing. The operation stopped after trading standards officers discovered it. But in July 2000 Mr Ram became involved in a similar operation with a Mr Binnings. For these matters Mr Ram was sentenced to 12 months imprisonment at Wolverhampton Crown Court on 15 March 2002, comprising 9 months' imprisonment for the offences involving Mr Beghal and 3 months' imprisonment consecutive for the offences involving Mr Binnings. In his sentencing remarks the Recorder observed:

"You have sought to set up a sophisticated operation to manufacture counterfeit clothing which I have no doubt would have been disseminated to the public via markets and the like…And of course I am bound to regard it as an aggravating feature that, having been investigated by trading standards in relation to the offences that involve Mr Beghal, you then start to do it all over again with Mr Binnings."

5. In September 2000 Mr Ram was found again to be in possession of counterfeit goods with the view to their sale. On this occasion there was no evidence that he was involved in their manufacture, but he was guilty of strict liability offences for which he appeared at Birmingham Magistrates Court in September 2001 and received fines totalling £1,500.
6. The latest offences occurred within a year or so from Mr Ram's release from prison. On this occasion the magistrates committed him to the Crown Court for sentence.
7. On 15 June 2005 Mr Ram applied to Judge Everard at Birmingham Crown Court to vacate his pleas of guilty. The prosecution opposed the application on the ground that the defence which Mr Ram sought to advance, namely ignorance that the goods were counterfeit, afforded no defence but merely provided mitigation.
8. Mr Rams' case was that the NY baseball caps had been supplied by someone he believed to be a legitimate trader and were paid for by cheque against an invoice, which Mr Ram produced. Its production led to the supplier being successfully prosecuted. His case in relation to the Tommy Sports items was that they had been in the firm's possession since prior to his father's death and (he said) had been seen by trading standards officers on the occasion of a previous search. The judge ruled that these matters did not amount to a defence but he sentenced Mr Ram on the basis that they were correct. The prosecution made clear at that hearing that it was not then able to confirm or deny the assertion that the Tommy Sports items had been seen on a previous occasion by trading standards officers, because it had not been given advance notice of the point. The judge imposed fines of £6,000 and ordered Mr Ram to pay costs of £5,500.
9. On the application of the prosecution, the judge also gave directions for confiscation proceedings under s 6 of The Proceeds of Crime Act 2002, including an order under s 18 requiring Mr Ram to make an affidavit disclosing full details of his assets.
10. The imposition of a fine while confiscation proceedings were pending contravened s 15. The illegality was corrected at a further hearing on 17 June 2006, when the judge rescinded the fines and adjourned sentence until after the confiscation proceedings.
11. It was common ground that under the provisions of the Act Mr Ram fell to be treated as having a criminal lifestyle, and the court was therefore required to make each of the assumptions set out in s 10 unless it was shown to be incorrect or there would be a serious risk of injustice if the assumption were made. If a court does not make one or more of the assumptions which are otherwise required, it must state its reasons: s 10(7).
12. Mr Ram swore an affidavit of means on 13 July 2005, which was brief and seriously defective. The investigating officer, DC Baker, produced a statement of information under s 16(3) of the Act, dated 7 September 2005, setting out the information available to the prosecution about Mr Ram's income and assets. Mr Ram made a statement in response, dated 3 February 2006, which was also defective. DC Baker made a second statement, dated 8 March 2006, which led to a further statement by Mr Ram dated 21 September 2006.
13. At the confiscation hearing oral evidence was given on behalf of the prosecution by DC Baker and by Mr Quinn, a trading officer who had been involved in the visits to the premises on 6 and 10 October 2003. On the other side, Mr Ram gave evidence and also called an independent accountant, Mr Donaldson.
14. The judge found that Mr Ram had been untruthful or not properly forthcoming about his means in a number of respects. His affidavit had been misleading about his real income and he had failed to mention a pension policy. The judge rejected his evidence that he omitted to mention the pension policy from forgetfulness.
15. In his statement dated 3 February 2006 Mr Ram had accepted a valuation suggested by the prosecution of £697,875 for a property at 11 Westfield Road, Edgbaston in which Mr Ram had an interest. DC Baker's statement had made it plain that this figure was based on the average property price for a detached house within the relevant postcode. As the judge found, Mr Ram well knew by the time of his response that this was a considerable undervaluation.
16. One of the matters discovered by DC Baker between making his first and second statements was that Mr Ram had applied to Coutts & Co for a £500,000 loan about the same time as he swore his affidavit. The information given to Coutts & Co was startlingly different from the information given in his affidavit. According to the bank's record of what it was told, Mr Ram took £75,000 from the business, which he tended to re-invest into property, and would take a further £75,000 as and when he required it. His net assets were put at nearly £4million. It was noted that the family had interests in India and were currently building a property portfolio in Dubai. The bank also obtained a professional valuation of the Westfield Road property at £1,350,000, of which Mr Ram was aware.
17. Mr Ram denied supplying the bank with the information which appeared to have come from him. The judge disbelieved him and found that the figures given by him to the bank for his income, etc., were a considerable exaggeration of his true means.
18. The judge also found that Mr Ram had exaggerated the extent of the searches carried out by the trading officers in October 2003 and that he had misled the court as to his means in the mitigation advanced on his behalf when he was first sentenced.
19. The prosecution submitted that Mr Ram's evidence was wholly worthless and that he had failed to show that any of the statutory assumptions was incorrect or that there would be a serious risk of injustice if the assumption were made. Applying the statutory assumptions, the prosecution suggested that his benefit came to a figure in the region of £9million.
20. Despite his various adverse credibility findings about Mr Ram, the judge concluded that the evidence given on his behalf persuaded him on the balance of probabilities that he had not made any benefit from his criminal lifestyle beyond the value of the goods seized in October 2003. That being so, the judge made no finding as to the amount available to him (under s 9), and made a confiscation order in the amount of the value of the goods seized.
21. The prosecution submit that he was wrong so to conclude. If, as they argue, he ought to have applied the statutory assumptions and found that Mr Ram's benefit was in the amount contended for by the prosecution, the next stage would have to be an assessment of the available amount, but neither party suggested that it would be appropriate for this court to carry out that exercise. The prosecution invited the court to allow the appeal, set aside the judge's order and remit the matter to the Crown Court.
22. The prosecution advanced six grounds of appeal. These were that the judge:

1. erred in finding that Mr Ram had displaced the statutory assumptions in the light of his findings of fact;

2 reached conclusions which were plainly wrong and contrary to the evidence in the case;

3 failed to deal with important factual issues which would or ought to have affected the correct approach to the case;

4. misunderstood the case presented and reached conclusions on issues which were not before the court;

5. failed to give any or sufficient reasons for reaching his conclusions on the facts or in law;

6. misapplied the law and/or effectively reversed the burden of proof when dealing with the statutory assumptions.

23. The judge's reasoning for finding as he did can be summarised as follows. He accepted that PR Textiles was a legitimate business. He was influenced in this regard by the evidence of Mr Donaldson. Mr Donaldson had identified the ten largest suppliers by value to PR Textiles in the six months preceding the October 2003 visits. Each of these suppliers was or appeared to be an established company or firm with a substantial business. Letters were sent to each supplier asking them to verify the extent of the trade during the sample period and whether the goods supplied were branded or unbranded. The judge concluded that the information provided by the suppliers was given in good faith by persons independent from Mr Ram, based on records kept by the companies or firms themselves. On the basis of that substantial sample, he considered that it was unreasonable to require Mr Ram to prove the details of every transaction in order to rebut the statutory assumptions. He said :

"I am entitled in my judgment to infer that since Mr Donaldson was able to help, and to a large extent in that six-month period, I am entitled to infer that the trading with those main suppliers was not criminal and infer from that his dealings with other companies during the whole period of time were legitimate."

24. The judge noted that the evidence from the major suppliers was that where goods were branded, the suppliers held the trademarks or authority from the proprietors of the trademarks, and he accepted that Mr Ram did not purchase and resell already branded counterfeit goods. He also accepted that there was no evidence of him being in a position himself to create counterfeit goods. There was an embroidering machine at the premises, but the unchallenged evidence was that this had been taken by Mr Ram in satisfaction of a debt, and there was no evidence of badges or any similar material being found at the time of the searches or on any other occasion. He also noted that there was no positive evidence of criminality other than the convictions to which reference has been made.
25. The prosecution's main grounds of appeal can be summarised under three heads: first, that the judge misdirected himself in law; secondly, that he failed to make essential findings and/or that he gave inadequate reasons for his findings; thirdly, that his essential findings were plainly wrong.
26. As to the judge's legal approach, it is clear that he had well in mind that the burden was on Mr Ram to rebut the statutory assumptions. Mr Braslavsky QC submitted that, although the judge paid lip-service to this rule, in practice he disregarded it. In particular, he pointed to passages in the judgment in which the judge said, for example, that there was no evidence of criminality apart from the relevant convictions and no evidence of embroidery carried on at the premises. This, he submitted, amounted in effect to a reversal of the burden of proof. We do not agree. On the approach taken by the judge, what rebutted the statutory assumptions was evidence, which he accepted, of lawful trading. The absence of evidence of embroidering at the premises or of other convictions was relevant when looking at the evidence as a whole.
27. Other legal criticisms were made in relation to the subject of lies told by Mr Ram. The judge was criticised for giving himself the equivalent of a Lucas direction. The point of substance which the judge was making was that the fact that Mr Ram had told lies did not automatically mean that he was incapable of rebutting the statutory assumptions. That was correct, notwithstanding criticisms which may be made of the way that it was expressed. It was also argued that it was not open to the judge to conclude that Mr Ram exaggerated his assets in his dealings with the bank. But there was no estoppel in this area. Mr Ram denied having exaggerated his means to the bank and denied having given it the information which the bank recorded. The judge effectively disbelieved him on both points. There was nothing in law to preclude the judge from finding that he was the source of the information recorded by the bank but that he had exaggerated.
28. As to the criticism that the judge failed to make essential findings and failed to give his reasons for the findings which he made, the hearing lasted four days and covered many matters. It was undoubtedly a short judgment. But the judge was not required as a matter of law to deal with each point on which there was a conflict of evidence. He had to deal with the essential issues in dispute and state his reasons for his conclusions. The nub of the case was whether Mr Ram could persuade the judge that the business of PR Textiles over the relevant period had been lawfully conducted. The judge found that it had and gave his reasons for so finding.
29. That brings us to the crux of the appeal, which is whether the judge's findings on that central issue were clearly wrong. Mr Ram's lies, shifts and evasions made him a most unsatisfactory witness. However, the judge gave his reasons for concluding that the business of PR Textiles had been a legitimate business. Central to that reasoning was the acceptance which he placed on the value of the evidence of Mr Donaldson. The prosecution did not challenge the integrity of Mr Donaldson. Their case was that the value of his evidence was severely limited. Many, although not all, of their reasons for saying so were points identified by Mr Donaldson himself. Mr Donaldson concluded that there was "evidence that the overwhelming majority of the trade of PR Textiles was in legitimate goods, and that income received from this trade was used for business purposes." We have looked at his reports and read his oral evidence running to 70 pages of transcript. He accepted that there were many deficiencies in the business's book keeping, but he concluded that the evidence from the suppliers was able to satisfy him that for the sample period studied by him the analysis work done was accurate. He had also looked at the overwhelming majority of cheque payments by the business, although he recognised that these would obviously not cover unrecorded cash sales. (Part of the purpose of examining invoices from the suppliers was to see whether they pointed towards the possibility of unrecorded sales by the business). Ultimately, the question is whether it was wrong of the judge to conclude as a matter of probability from his evidence that the business conducted with those suppliers was legitimate; to conclude further, from the absence of tangible evidence of embroidery, that unbranded goods supplied by those suppliers had not then been turned into counterfeit goods; and to conclude that it was reasonable to treat the business with the major suppliers over the period which Mr Donaldson had investigated as representative of the whole. The judge had the benefit of seeing and hearing Mr Donaldson give his evidence. We are not persuaded that we should hold that the judge was wrong to reach the conclusions that he did. This appeal is accordingly dismissed.