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Civil/criminal dishonesty: Supreme Court confirms consistent, objective approach

Card player turning over the Ace of Diamonds and a stack of gambling chips next to the player Print publication

28/11/2017

The criminal test for dishonesty has been radically altered by the Supreme Court in the recent case of Ivey v Genting Casinos [1]  Walker Morris’ Regulatory and Commercial Dispute Resolution specialists explain.

Considering criminal dishonesty

The case concerned a professional gambler (Mr Ivey) being denied his winnings of £7.7m from a game of Punto Banco Baccarat, which he had won through his use of a variation of card counting called “edge sorting”.  The Casino had denied Mr Ivey his substantial winnings on the basis that he had fixed the game to such an extent that he had cheated.  Mr Ivey contended that he could not have dishonestly cheated the casino out the winnings, as he himself did not consider this method of card counting to be dishonest, but was instead creating an advantage through legitimate gamesmanship.

To decide the case, the Supreme Court had to consider the correct legal test for ascertaining dishonesty.  The traditional standard of dishonesty for criminal cases was established by R v Ghosh [2] some thirty-five years ago and consisted of two limbs:-

  1. whether, according to the ordinary standards of reasonable and honest people, what was done was dishonest (an objective question); and
  2. whether the defendant himself subjectively realised that what he was doing was, by those standards, dishonest.

A surprising and significant decision

In Ivey, the Supreme Court effectively severed the second limb of the Ghosh test, deciding that it had “a number of serious problems” [3].  For example, the Ghosh second limb meant that the more warped a defendant’s standards of honesty were, the less likely it would be that he or she would be convicted of a dishonesty offence; it was a difficult test for jurors to understand and apply; and it represented an unprincipled divergence between criminal law and the test of the same concept when it arises in a civil context.

The criminal test for dishonesty has therefore been aligned with that applied in civil cases. However, Ivey has not totally dispensed with the subjective test; the Supreme Court judgment explained that the dishonesty test remains subjective in nature but that is the defendant’s state of mind that is to be judged by applying an objective standard. There is no longer a requirement that the defendant must appreciate that other people would regard what he or she has done as dishonest.

WM Comment

With the distinction between the two removed, the Supreme Court has streamlined the dishonesty test. It has also dealt with the somewhat anomalous position where, on the same set of facts, a person could be adjudged dishonest in civil proceedings but not in criminal proceedings.  Now a clear and unified test for both criminal and civil dishonesty is in place, albeit the standard of proof remains different between the two types of jurisdiction. Ivey is now the new benchmark that the courts will have to consider and apply when determining dishonest conduct in any given case.

This will have a significant impact on the criminal law, particularly in relation to fraud and acquisitive offences where many defendants would previously have been prepared to try their luck by relying on spurious arguments relating to their own unreasonable belief of what is honest.  It will also have the effect of bringing many offences (requiring dishonesty) into line with more recent legislation, such as the Criminal Finances Act 2017 and the Bribery Act 2010, where dishonesty does not need to be proven.

It may also have the effect of encouraging prosecutors to bring cases, particularly complex fraud and white collar offences, in circumstances where they might previously have been deterred due to a lack of proof of Ghosh standard dishonesty. Now, a prosecutor may simply place before the court evidence of what the accused did and thought, and invite the court (which will often be a jury) to decide that he or she was dishonest.

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[1] [2017] UKSC 67
[2] [1982] 2 All ER 689
[3] Ivey ibid. para 57

 

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