England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2A 2LL
		24th January 2008

1. MR JUSTICE ROYCE: The appellant, Jhalman Singh, appeals against a confiscation order of £585,422.63, made by His Honour Judge Bevan at Luton Crown Court on 5th May 2006.

History

2. From about 1990 the appellant carried on business as a sole trader working in market stall retailing. On 19th January 1999 he pleaded guilty to seven offences, contrary to section 92(1)(b) of the Trade Marks Act 1994, as a result of his market stall trading in Bedfordshire in November 1997. He also pleaded guilty to four similar offences as a result of his market trading at Cambridgeshire in November 1997. Thereafter he was investigated by Bedfordshire Trading Standards in March 1999 and again by Hounslow Trading Standards in December 2002. On 7th May and 14th May 2003 test purchases were made from his stall by an enforcement officer of Bedfordshire County Council. Goods were found that were counterfeit. On 28th May 658 items were seized of which 198 were found to be counterfeit. That seizure gave rise to 26 summonses, under section 92(1)(c) of the Trade Marks Act 1994, and five summonses, under section 1(1)(b) of the Trade Descriptions Act 1968.
3. On 28th October 2004 District Judge Callaway found that the appellant had failed to establish the statutory defence under either Act and found that the summonses were proved. He was committed to the Crown Court for sentence. During the course of his judgment the District Judge accepted that a part at least of the defendant's trading was legitimate but found that he had been dishonest in evidence in relation to the sources of his illegitimate supply.
4. On 22nd July 2005 at Luton Crown Court the appellant pleaded guilty to three further offences, contrary to section 92(1)(c). Those offences related to seizures at different premises owned by the appellant in Bedford and from a market stall in November 2004. 479 items were seized, of which 341 were found to be counterfeit.
5. On 25th August 2005, before Mr Recorder Hollander QC at Luton Crown Court, he was sentenced to 100 hours' community service on the Trade Mark Act offences, for which he was committed for sentence, and for three offences to which he had pleaded guilty in July. No separate penalty was imposed for the Trade Description Act offences for which the maximum sentence was a fine.

The Confiscation Proceedings

6. These were initiated by the Assets Recovery Agency. That involved the service of a statement of information, under section 16(3) of the Proceeds of Crime Act 2002, which was served on 7th September 2005. The appellant's response was served on 6th March 2006. There was then a prosecution statement in rebuttal served on 7th April. The hearing took place before His Honour Judge Bevan on 5th May 2006.
7. It was common ground that (a) the confiscation regime under the 2002 Act applied, (b) offences contravening section 92 of the 1994 Act were "life-style" offences, under Schedule 2 of the 2002 Act, (c) in consequence the appellant was deemed by virtue his convictions to have a criminal life-style and the court had to determine whether and to what extent he had benefited from his "general criminal conduct" under section 6(4) as defined by section 76(1) and (2).
8. In so far as is material section 10 provides as follows:

"1) If the court decides under section 6 that the defendant has a criminal lifestyle it must make the following four assumptions for the purpose of—

(a) deciding whether he has benefited from his general criminal conduct, and.

(b) deciding his benefit from the conduct.

(2) The first assumption is that any property transferred to the defendant at any time after the relevant day was obtained by him—

(a) as a result of his general criminal conduct, and.

(b) at the earliest time he appears to have held it.

(3) The second assumption is that any property held by the defendant at any time after the date of conviction was obtained by him—

(a) as a result of his general criminal conduct, and.

(b) at the earliest time he appears to have held it.

(4) The third assumption is that any expenditure incurred by the defendant at any time after the relevant day was met from property obtained by him as a result of his general criminal conduct."

It is unnecessary to deal with the fourth assumption.

9. Section 10(6) provides:

"But the court must not make a required assumption in relation to particular property or expenditure if—

(a) the assumption is shown to be incorrect, or

(b) there would be a serious risk of injustice if the assumption were made."

The relevant day for the purposes of section 10(8) was agreed to be 14th January 1998.

10. The prosecution statement had set out deposits made into eight different bank and building society accounts over the relevant 6 year period, amounting to £255,134 which, when adjusted to take account of the change in value of money, produced a figure of £279,125. No cash withdrawals had been made from those accounts. Furthermore there was no evidence that those accounts were being used for payment of clothing supplies.
11. Such invoices as the appellant had for purchases were analysed in the prosecution statement and a schedule of the invoices was produced, Annex R. The majority of those were noted "paid in cash". They amount £264,823. The value of the counterfeit clothing seized was £18,885.
12. When the change in value of the money was taken into account, the resultant figure claimed was £305,902. The prosecution also claimed that the property held by the appellant to the value of £236,475 should be brought into account. That contention was not accepted by the judge and does not feature in this appeal.
13. The judge concluded, applying the relevant assumptions, that the benefit should be calculated by reference (a) to the amounts paid into accounts and (b) the expenditure. He arrived at a adjusted figure of £585,422.

The Appellant's Submission

14. Mr Tedd QC, on behalf of the appellant contends that in determining the appellant's benefit, the judge had erred when taking the total of the bank credits and invoices added together in failing to allow for any overlap. He, it was contended, had made an error in his assessment of the suppliers invoices, and the statements concerning their trading with the appellant provided by those suppliers, in that he effectively discounted all those documents as unreliable upon the grounds that about 60 per cent of the suppliers in terms of value were of bad character. Mr Tedd contends that the so-called bad character of those suppliers demonstrated at the most that the supplier had committed occasional trademark offences in the course of years of substantial trading. He submitted that that was no basis for drawing the inference that the invoices could not properly be regarded as accurate and therefore should be discounted.
15. Mr Tedd also submitted that the judge was wrong in ignoring the conclusions of District Judge Callaway, that a substantial part of the appellant's trading was legitimate. Furthermore, he points, in his written submissions, to the fact that before Mr Recorder Hollander the prosecution accepted in effect that part of the appellant's stock was not counterfeit. The consequence, submits Mr Tedd, is that, first of all, on the documentary evidence before the judge, he should have concluded that part at least of the trading was legitimate, and secondly, in any event if he did not make some discount of the benefit figure, there was a substantial risk of injustice. The prosecution, unsurprisingly, maintained the judge's approach was a proper one and he reached the correct conclusion.

The Legal Principles

16. In R v Walbrook & Glasgow [1994] Crim LR 613, the Court was concerned with a case under the Drug Trafficking Offences Act 1986, section 4(3). This Court emphasised that the effect of section 4(3) is to impose on the defendant the burden of satisfying the court that the amount that might be realised in respect of property is less than the value of the proceeds of drug trafficking. Russell LJ said:

"In our view, this he must do by producing clear and cogent evidence. Vague and generalised assertions, unsupported by evidence, will rarely if ever be sufficient to discharge the burden upon the defendant."

In R v DePrince [2004] 2 Cr App R(S) 91, [2004] EWCA Crim 524, this Court again had to consider the application of subsection 4(3) and the proviso in section 4(4) which is in similar terms to section 10(6) of the Proceeds of Crime Act. There the judge had given credence to evidence given by the defendant's girlfriend that part of the defendant's legitimate income came from off-the-books property business. Both the defendant and his girlfriend had given evidence that it had been extremely successful. The judge decided to reduce by 25 per cent certain items of income and expenditure, to allow for legitimate income based principally on the evidence of the girlfriend. This Court indicated that it could be said that the judge had leaned over backwards to reach conclusions favourable to the defendant but held that his approach was a legitimate one. What he was saying was that in the percentage that he selected he was giving a generous discount to guard against the possibility that a small part of the fund was in fact legitimate. What that authority does not establish, in our judgment, is that a judge is required to give such a discount when he is not satisfied that there has been sufficient evidence to displace the assumptions.

17. More recently in R v Jones [2006] EWCA Crim 933, this Court was concerned with a situation rather closer to the present. Confiscation proceedings resulted in the judge making a finding that the benefit figure was £142,018 under the Proceeds of Crime Act. Davis J, giving the judgment of the Court, summarised the position at paragraphs 7 to 21. Of particular significance was paragraph 20 where he said this:

"Mr Sinclair, however, goes on to criticise the judge in finding that this business was entirely dishonest and in particular for the emphasis that the judge placed on the lack of records and so on. Mr Sinclair makes the point that it is perfectly possible for a business as a whole to be a legitimate business, even though, illegitimately, tax on any profits and any VAT due is not paid. But the fact remains that if persons such as this appellant in this particular business choose to operate their business dealings in such a way as to deal only in cash and to keep no records of any kind whatsoever they have to take the consequences that may arise: not least for the purposes of the potential application of the Proceeds of Crime Act 2002. These considerations were clearly, in our judgment, relevant to the judge's conclusion on this particular point and simply went to show that in documentary terms the appellant was in no position to discharge the burden on him for the purposes of section 10(6). It was also relevant to the question of whether or not there was a serious risk of injustice if the statutory assumptions were made."

The Judge's Approach in the Present Case

18. In considering whether the assumptions can be shown to be incorrect or whether there would be a serious risk of injustice if they were made, the judge considered the evidence as a whole. First, he set out the chronology at page 3A - F. He concluded that the appellant's criminal life-style was borne out by the criminal history. At 3F he said:

"He is therefore described as - and I agree - a persistent counterfeit seller, and he has chosen not to stop. Those facts are relevant to Section 10(6)(a) and (b)."

In our judgment, those observations were well founded.

19. Secondly he considered the suppliers. He said:

"In addition, a number of his suppliers who have provided references for him in the defence bundle are shown to be, and accepted to be, of bad character by the documentation that has been put before him. Of them, Raves, Boston, Kentex, and some others, can be shown to be responsible for about £171,000 worth of receipts of £264,000 worth of receipts - roughly 60 percent."

As we have already indicated Mr Tedd criticises that conclusion. However, there was material before the judge in respect of criminal convictions, cautions and warnings in respect of a number of those suppliers for trade mark offences. Their invoices have to be considered against a background of the complete lack of other records. The judge was entitled to conclude that a number of the suppliers were of bad character, and to regard the invoices from them with the gravest of suspicion.

20. Thirdly, he turned to the books and accounts and the appellant's credibility. At page 4A - H he said this:

"The onus is on the defence to indicate where the prosecution are wrong. There is no dispute that there are no accounts in this case. Certainly there are no accounts that were produced at the time. The Defendant has given evidence that he did produce some accounts. He was requested, and put under pressure by his solicitor, to produce accounts. He says that he did not know what they were for, but his solicitor wanted them and so three or four weeks ago he concocted six or seven books of account.

I am bound to say that it is with good reason that Mr Lewis for the Defendant states that perhaps [the appellant] lacks credibility. I am bound to say that charming as Mr Singh may be, he, to my mind, told a pack of lies during the course of his evidence, and he simply altered his evidence from minute to minute - for example, saying to me that he has no genuine books at all and never has had, and has had no accountant or book-keeper; then, two minutes later, saying that there was an accountant who he had had since 1999 called George Williams, although quite what he was being paid £700 a year for was not exactly clear.

There are other aspects which I will not go into in which I find Mr Singh a witness wholly lacking in credibility."

That conclusion Mr Tedd realistically accepts cannot be challenged.

21. Fourthly the judge, dealt with the question of mark up. At page 5A he pointed out that the appellant had good reason to seek to distance himself from the books he had produced, because they indicated a mark up of about 300 per cent whereas he was saying in evidence his mark up was about 30 per cent. Again, we consider the judge was fully entitled to reject the appellant's evidence about such a low markup.
22. Fifthly, he dealt with the submission that only 10 per cent of the trading was dishonest. He concluded that the appellant had engaged in off-record trading. At page 5C-F he set out his conclusions in relation to that. He concluded that the appellant had indeed told Trading Standards officers and the Inland Revenue that goods without a receipt get you a cheaper deal than if you do insist on a receipt. Although the defendant denied that in evidence, the judge was fully entitled to disbelieve him and to conclude that off-record dishonest sales had taken place. Furthermore, he accepted the proposition that dishonest goods sell better and more quickly than legitimate goods. Again he was entitled to do so.
23. So far as the appellant's proposition that goods seized were only 40 per cent of the value, he accepted the prosecution point that within the last search 85 per cent of the goods taken were dishonest and in any event purely cash non-invoiced transactions would not be recorded. The judge rejected the appellant's argument about double counting, as he accepted the prosecution submission that any risk of that was more than offset by off-record trading. He was entitled so to do.
24. It is correct that District Judge Callaway had at the trial concluded that the appellant had some substantial legitimate business. But he also disbelieved the appellant about where his illegitimate stock came from. The District Judge's finding were not concerned with confiscation; he did not have to apply the assumptions under the Proceeds of Crime Act and furthermore he was only concerned with the summonses arising out of the 2003 seizure. We do not consider that his findings in any way invalidate the conclusions reached by His Honour Judge Bevan under different procedures and considering different evidence.
25. As in Jones, Mr Tedd faces a difficult task in suggesting to us what percentage discount should be applied to avoid any injustice. He put forward four options. But it is impossible to settle on one of those options rather then another.
26. We have to consider whether or not the judge was wrong in concluding that the assumptions had not been displaced. Having considered his reasoning with care, we conclude that he was not wrong.

Summary of Our Conclusions

The judge carefully considered the respective arguments and was fully entitled to conclude that the assumptions should remain in place and that no injustice arose as a result of such conclusion. In relation to that he was entitled to expect clear and cogent evidence on behalf the appellant to displace those assumptions. He did not have before him clear and cogent evidence so to do.

He had before him manifestly dishonest evidence from the appellant, who in producing books for the proceedings must at that stage have been determined to deceive the court. He was entirely lacking in credibility.

He had highly suspicions invoices, which he was not obliged to take at face value.

He rightly concluded that there was other cash trading of goods with no records whatsoever. That may have been very substantial. Its extent was impossible to determine because of the dishonest nature of the appellant's record keeping.

If, and in so far as there had been legitimate trading, it was impossible to determine its percentage and that was because of the appellant's determination in spite of regular brushes with trading standards and the Revenue, to keep no accounts, so as to facilitate his criminal life-style. The Judge was not under a duty to speculate and pluck some figure from the air.

The judge's reasoning and the approach cannot be criticised in spite of the skilful and attractive arguments of Mr Tedd to the contrary. The consequence is that this appeal must be dismissed.

27. MR BARRY: My Lord, the Crown have two ancillary applications. Can I take the Court briefly, please, to divider 9, where the relevant orders of the lower court are set out. We have a proposal, as far as the confiscation order itself is concerned. The Crown are mindful of the fact that this appellant was of course granted leave, but it was always likely that he would have to pay at least a percentage of the confiscation figure in this case. For that reason we propose the following: £300,000 to be paid by him immediately, bearing in mind that he has been on notice that he would have to pay that from 5th May 2006 and the remainder within a period of 3 months, please. For the avoidance of doubt the prosecution costs in the lower court, set out at page 90, to be paid immediately as well, please. That is our application as far as the lower court proceedings are concerned.
28. My Lords, I have a more difficult application as far as the costs of these proceedings are concerned. Can I take my Lords very briefly to Chapter 6, paragraph 34 in Archbold indicating immediately, as I have indicated, that, of course, Mr Singh was granted leave in this case and I bear in mind what is set out in Griffiths v Pembrokshire County Council, that is to say the impression should not be given that appellants cannot exercise their rights to appeal. Can I make it plain that the prosecution have not put this appellant on notice of an application for costs in these proceedings. Nonetheless, that is my application to be taxed, please, subject to what is set out in Griffiths v Pembrokshire County Council.
29. LORD JUSTICE RICHARDS: Can I draw your attention to 7 - 176, which is I think taken from the Registrar's Guide to Proceedings in this Court, as one sees from 7 - 163. At 7 - 176, paragraph 20.6, it is provided that an order for costs made against an appellant, where an appeal is dismissed, the amount to be paid must be specified in the order. Where counsel for the prosecution appears before the court he should be prepared to advise the court as to the amount of costs incurred by the prosecution in responding to the appeal or application.
30. MR BARRY: I know what the quantum is as far as I am concerned, I do not know what the position is so far as those who instruct me. Can I turn my back on my Lord for a moment?
31. LORD JUSTICE RICHARDS: Yes.
32. MR BARRY: (Pause) My application is for £3,500. I can distinguish between the two heads if my Lord would like.
33. LORD JUSTICE RICHARDS: I think that is going to be unnecessary unless Mr Tedd requires it. Yes, Mr Tedd what do you say about these two applications?
34. MR TEDD: The figure that is put forward, nor can I sensibly suggest that an order for cost should not be made against the appellant. So far as there is nothing in the point. "You lose, therefore you pay" underlines the principle.
35. LORD JUSTICE RICHARDS: Let us deal with that matter. We agree and order costs. We order in that case the appellant pays prosecution costs in the sum of £3,500. So far as that limb is concerned.
36. MR TEDD: May I deal simply with the question of the time. It is correct that the appellant has been on notice as to the risk of having to pay a confiscation order. I do ask, however, he have 28 days essentially administratively to pay, not least because of course there is a prison sentence in default. I invite your Lordships to give a little longer than 3 months so far as the balance is concerned. These are very large sums some of which what can be gleaned from the state of his finances would require property to be realised.
37. LORD JUSTICE RICHARDS: Is there any reason why the costs below and the costs of the appeal should not be paid within a shorter time than the 28 days you put forward, for example, 7 days. Because I think the costs below were £11,000 or thereabouts and £3,500 for the appeal.
38. MR TEDD: Given the comparatively small sums compared with the whole, the applicant cannot sensibly resist that.
39. LORD JUSTICE RICHARDS: Mr Tedd, we are going to order the costs to be paid within 7 days, that is to say both the costs below and the costs that we are ordering in respect of the appeal. The £300,000, we think it is not right to order that to be made immediately; we are going to allow 28 days for payment of that sum. The remainder of the sum due under the confiscation order is to be paid within a period of 3 months. The default periods and so forth stand without our needing to say any more. Is there anything else?
40. MR TEDD: No, thank you.