A Barbadian businessman’s conviction for selling fake Puma merchandise will remain on his criminal record, after the Caribbean Court of Justice (CCJ) sided with the local courts and threw out his appeal.
The Trinidad-based court, in a 3-2 majority decision, dismissed arguments by Grenville Ricardo Delpeache’s legal team that the charges for breaching trademark legislation should instead have been filed against his company, Ouch Boutique Ltd, because he was protected from personal criminal liability.
In the judgment handed down on Thursday, one of the CCJ judges said the ruling will “undoubtedly have monumental implications” for incorporated small businesses.
Delpeache became the first man to be convicted in Barbados for trademark offences when he was found guilty in the Magistrates’ Court in February 2018 of charges related to selling PUMA Fenty by Rihanna, Creeper Sneakers and PUMA Fenty Slippers, as well as exposing for sale Puma slippers, shoes and backpacks which were counterfeit, in his Swan Street boutique.
He was fined $15 000 for the offences which were committed in May 2017.
Delpeache sought to have his conviction overturned at the Court of Appeal but when that was unsuccessful he turned to the CCJ, the country’s final court of appeal.
Four months after a five-member panel comprising Justices of Appeal Jacob Wit, Winston Anderson, Maureen Rajnauth-Lee, Denys Barrow and Andrew Burgess heard the matter on March 25 this year, the CCJ released its judgment affirming the conviction.
“The court decided that Delpeache was properly charged,” the CCJ said on Thursday.
Delpeache was the sole director of Ouch Boutique Ltd., a limited liability company incorporated in 2012 to take over his business which he had operated as a sole trader since 2006. Delpeache was on the premises when police seized the counterfeit items and he was subsequently charged with three offences under the Trade Marks Act.
In the appeal, the CCJ considered: whether the charges brought against Delpeache personally should have been brought against the company, which in law, is its own person; whether Delpeache should have been charged for being complicit in the crimes that were allegedly committed by the company; and whether the Commissioner of Police should have obtained the direction of the Director of Public Prosecutions (DPP) before bringing the prosecution.
Delpeache, through his attorneys, had argued that the Court of Appeal’s decision was wrong as the charges which were brought against him personally should have been brought against the company. The appellate contended that while, in certain cases, the courts have “pierced” the corporate veil and looked behind it to see who controls the company and held those persons liable and not the company, this was not a proper case to have done so.
The core of his case was that the separate legal personality of the company protected him, the individual, from personal criminal liability.
However, Justice Barrow was of the view that where an individual, acting for and through a company, personally performs criminal acts in conducting the company’s business, that individual may be prosecuted for those acts.
“The individual gains no protection from the existence of the separate legal personality of the company. There is no principle that a criminal offence committed in the name of a company is the action of the company and not of the individual who performed the criminal actions,” stated the judgment authored by Justice Barrow.
In a concurring judgment, Justices Wit and Rajnauth-Lee agreed that Delpeache personally committed the offences and could be prosecuted.
They further noted that where a person is prosecuted for offences he personally committed, the direction of the DPP is not needed. Additionally, they said, in cases of prosecution for trademark offences, the statutory provision requiring such direction does not even apply.
However, in a dissenting judgment, Justice Burgess was of the view that after being incorporated, Delpeache’s company was in law a separate legal person from the appellant, its incorporator and sole director.
Justice Anderson concurred, stating that the company had in law committed the offences and was therefore liable for the commission of the offences as a principal offender and Delpeache, the director, was only liable to be prosecuted and punished as an accessory or secondary party.
Justices Burgess and Anderson contended that Delpeache should therefore not have been prosecuted as a principal offender nor held guilty of the offences charged.
Further, Justice Burgess said, the DPP’s direction was required when proceeding against a director and should have been obtained in this case.
He pointed to Section (22) 2 of the Interpretation Act which he said “permits the corporate veil to be lifted and certain corporate officers to be prosecuted for offences committed by their companies” but only, according to Section 22 (3) of the same Act, on the direction of the DPP.
“There is no evidence in this case that the Director of Public Prosecutions gave any directions that the appellant be charged. The settled law is that the absence of such evidence rendered the prosecution of the appellant before the magistrate a nullity…. That being so, I agree with counsel for the appellant that the appellant was not properly charged and therefore prosecuted and convicted for the charged offences,” said Justice Burgess.
He further noted that the identification principle was developed in cases where the corporate defendant was a large company with many shareholders, employees, and directors. That principle merges a company and the actions and intent of the servant or agent who was delegated the governing authority of the company.
Justice Burgess said that while that works very well in respect of large companies because there is unlikely to be significant overlap between the identity of the corporate owners and the company itself, the position is very different where, on the other hand, the company is a small, closely-held company.
“In such a case, the individual owner is invariably the directing mind and will of the company and as such liable to be prosecuted for offences committed by the company. Thus, if the right to incorporate a one-person company … is to have meaning, courts must be particularly vigilant in mens rea offences in insisting on the strict observance by the prosecutor of any stipulated conditions in a provision which grant statutory permission to pierce the corporate veil and to prosecute a corporate officer for an offence committed by a company,” the judge said.
“One-person companies in Barbados must not be treated as though there are mischievous stratagems but must be seen as critical tools of small business and macroeconomic policy.”
Justice Burgess said he would have upheld Delpeache’s appeal.
The businessman was represented at the CCJ by Andrew Pilgrim Q.C and Rashida R Edwards, while the respondent, the Commissioner of Police, was represented by Olivia M Davis S.C. and Krystal C Delaney. (DP)