The dishonesty test – The courts ‘new’ approach…

A recent ruling from the Supreme Court has sparked a significant change in the court’s approach to dishonesty during criminal proceedings. Harrison Drury’s regulatory team, headed up by David Edwards, takes a closer look at the impact of this judgment.

For years now, in criminal matters, the courts have referred to the two stages of dishonesty as per the R v Ghosh [1982] EWCA Crim 2 case. For dishonesty to have been made out, a jury would have needed to satisfy themselves that ‘yes’ was the answer to both the following questions;

1. Whether the conduct complained of was dishonest by the standards of ordinary, reasonable and honest people; and, if yes

2. Whether the defendant realised that ordinary, honest people would regard his behaviour as dishonest

What happened in the Ivey v Crokfords casino case?

Ivey (Appellant) v Genting Casinos (UK) Ltd t/a Crockfords (Respondent) [2017] UKSC 67  On appeal from [2016] EWCA Civ 1093, the Supreme Court unanimously found that the second stage of the Ghosh test, no longer appropriately reflected the correct position.

Professional gambler, Mr Ivey attended Crockfords casino in Mayfair in August 2010 and played Punto Banco with his associate – Ms Sun. Over the course of two days, Ivey won £7.7m which Crockfords refused to pay out because it believed Ivey had cheated.

During the proceedings, Ivey openly admitted to using the ‘edge sorting’ method at the casino. ‘Edge sorting’ is when the manufacturing process of playing cards causes tiny differences to the edges of some playing cards – consequently making them easier to identify.

Subject to Ivey winning the game, he requested that the senior croupier used the same shoe of cards. Ivey’s associate also requested that the senior croupier turn the cards in a particular way, as and when she instructed. As a result, the long edge of the ‘no good cards’ were stacked in a different way to the long edge of the ‘good cards,’ letting Ivey easily identify the cards he needed to win the game.

Several days later, Crockfords advised Ivey that they wouldn’t be paying his winnings because they believed the game had been compromised.

The High Court ruled that Ivey’s use of ‘edge sorting’ was in fact cheating, the Court of Appeal agreed with this outcome and the Supreme Court unanimously dismissed the appeal.

What is the revised approach?

Referring to several other significant cases, the Supreme Court has concluded that the second stage of the Ghosh test was in fact allowing the defendant to escape liability. Based on the notion that the defendant would only be held criminally responsible for their behaviour if they understood that their behaviour could be regarded as dishonest.

It was the court’s view that the Ghosh test portrayed an unclear mix of both a subjective and objective test, so the court looked to the test of dishonesty, adopted by the civil law.

The Supreme Court is clear that dishonesty isn’t solely confined to criminal law.

The ‘new’ dishonesty test is now set out as per Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378, and Lord Hoffmann in Barlow Clowes International Ltd v Eurotrust International Ltd [2006] 1 WLR 1476:

“Although a dishonest state of mind is a subjective mental state, the standard by which the law determines whether it is dishonest is objective. If by ordinary standards a defendant’s mental state would be characterised as dishonest, it is irrelevant that the defendant judges by different standards. The Court of Appeal held this to be a correct state of the law and their Lordships agree.” [pp1479-80]

Lord Hughes’ further added:

“When dishonesty is in question the fact-finding tribunal must first ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. 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.” [Para 74] 

How will this impact professional regulators

It is currently unclear as to how this landmark ruling will affect the way in which Professional Regulators such as the Solicitors Disciplinary Tribunal (SDT), the Nursing and Midwifery Counsel (NMC), Medical Practitioners Tribunal Service and other such bodies operating in regulatory sectors, investigate and prosecute matters, particularly bearing in mind that such regulators are arbiters of both law and fact.

It can only be assumed that further down the line, the requirement for such clarity will need to be addressed, which will likely result in further developments for professional regulators, and those who they investigate and prosecute.

What happens now?

The Supreme Court inciting the courts to divert away from the landmark approach to dishonesty in criminal cases is a key development, but while the Supreme Court’s ruling in this case is clear, the way the ‘new approach’ will be adopted and implemented is not. This may remain the case for quite some time whilst further cases testing the revised dishonesty approach are ruled upon.

For further information as to the significance of the ruling, contact Harrison Drury’s regulatory team on 01772 258321.