Supreme Court aligns criminal and civil law concepts of dishonesty

In a landmark judgment, the Supreme Court has determined that the second limb of the “Ghosh test”, used to determine dishonesty in criminal cases for 35 years, did not correctly represent the law. The court noted that directions based upon the Ghosh test should no longer be given to juries in the criminal context, and that the civil formulation should now be used to determine whether a defendant is dishonest.

Key points

• Prior to this judgment, when considering whether a defendant was criminally dishonest, a jury would be directed to the Ghosh test, including considering whether a defendant appreciated that what he was doing was dishonest.
• However, the Supreme Court has identified “serious problems” with that test, noting that it does not correctly represent the law.
• The judgment could change the approach to criminal trials where dishonesty is alleged, as it appears that all cases should now apply the civil test of dishonesty going forward (albeit having to prove that dishonesty to the higher threshold test of “beyond reasonable doubt”).
• There are likely to be particular implications in respect of fraud cases, where disputes often centre on whether a defendant was dishonest.

Facts

In Ivey v. Genting Casinos Ltd t/a Crockfords [2017] UKSC 67 the Supreme Court ruled that a professional gambler could not recover ‘winnings’, which amounted to £7.7m, from a game played at Crockfords Club (the “Club”) in 2012.

The underlying facts of the case concerned a technique known as ‘edge-sorting’ that Mr Ivey used while playing a game at the Club over two days in August 2012. Mr Ivey argued that he acted in the honest belief that the technique was legitimate.

The Club refused to pay Mr Ivey his winnings on the basis that it considered the technique to be cheating. Mitting J held at first instance that Mr Ivey had in fact cheated, with Mr Ivey later appealing the decision. The Court of Appeal dismissed the appeal, finding that dishonesty was not a necessary element of cheating.

Supreme Court decision

The Supreme Court considered (i) the meaning of cheating; (ii) the relevance of it to dishonesty; and (iii) the proper test for dishonesty if it is an essential element of cheating.

The Court focussed on the dishonesty test as determined in R. v Ghosh [1982] QB 1053, which required a jury in a criminal trial to consider the following two limbs when determining whether a defendant acted dishonestly:

1. Was the conduct complained of dishonest by the lay objective standards of ordinary reasonable and honest people (i.e. an objective test); and, if so
2. Did the defendant realise (i.e. subjectively) that ordinary honest people would so regard his behaviour.

In its judgment, the Supreme Court described a number of “serious problems” with the second limb of the Ghosh test, noting (amongst other points) that:

1. It has the unintended effect that the more warped the defendant’s standards of honesty, the less likely it is that he will be convicted of dishonest behaviour.
2. It sets a test which jurors and others often find puzzling and difficult to apply.
3. It has led to an unprincipled divergence between the test for dishonesty in criminal proceedings and the test of the same concept when it arises in the context of a civil action.

The Supreme Court noted that:

“...there can be no logical or principled basis for the meaning of dishonesty (as distinct from the standards of proof by which it must be established) to differ according to whether it arises in a civil action or a prosecution. Dishonesty is a simple, if occasionally imprecise, English word. It would be an affront to the law if its meaning differed according to the kind of proceedings in which it arose.”

Instead, the test of dishonesty should be as set out by Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 and by Lord Hoffman in Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37 (paragraph 74 of the judgment):

“When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.”

The Supreme Court in Ivey upheld the decision of the Court of Appeal, finding that the techniques used were positive steps to pre-determine the deck of cards and therefore amounted to cheating, regardless of what Mr Ivey believed.

Comment

The Supreme Court’s decision in Ivey is profound, overturning the settled position for the last three decades. Defendants, when charged with offences (such as fraud) where dishonesty is a crucial element, now face the prospect of the prosecution having to surmount one less hurdle to prove its case. Any arguments based on cultural misunderstandings or widely accepted practices that may have been raised previously, will no longer be directly relevant when a court determines whether dishonesty has been established.

One can understand why the Court reached this view – why should dishonesty mean something different in the civil and criminal contexts? However, a difference will rightly still remain in the threshold test required to prove one’s case: in the criminal courts, the prosecution must prove dishonesty beyond reasonable doubt, whereas in the civil courts a claimant must prove its case on the balance of probabilities.

Although it is unclear how Ivey will ultimately affect the manner in which dishonesty offences are charged and prosecuted, it is likely that the simplified test will make it easier for juries to understand the question they need to answer and, ultimately, as one of the necessary elements that a prosecutor has to prove beyond reasonable doubt has been removed, it may make it easier to convict those types of offences. The question is no longer whether the Defendant appreciated what he was doing was dishonest, but rather, should he have appreciated it.