Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67, No more Ghosh test – dishonesty is like an elephant

The Supreme Court has declared that the test from R v Ghosh [1982] QB 1053 should no longer be used when directing a jury on dishonesty. In a pithy judgment by Hughes LJ, the court held that the case of Ghosh, used for decades to define dishonesty in criminal matters did not in fact correctly represent the test for dishonesty.

The Facts

Two professional card players, Mr Ivey and Ms Sun, used a highly specialised technique called ‘card sorting’ to secure an advantage in a game of Punto Banco. In employing this technique, they had won around £7.7m from a casino. The technique involves observing the pattern printed on the back of pack of playing cards. Due to the way the cards are manufactured, a highly trained eye can spot slight differences in the patterns on each card that was dealt. Ms Sun performed this function, asking them to be laid out on the card table in a configuration that assisted Mr Ivey. This resulted in the patterns being sorted in a particular order, giving Mr Ivey an idea of the value of some of the cards.

The casino refused to pay the winnings, and Mr Ivey brought a contractual claim against it. The casino argued that Mr Ivey had breached the contract between them by cheating, and alternatively, argued that his actions were dishonest.

The method of gaining an advantage was not disputed. Mr Ivey, however, argued that it was not dishonest to play to his advantage, and it was not cheating.

The Supreme Court was primarily asked to decide whether card sorting amounted to cheating, but also stated that the dishonesty test as outlined in the case of R v Ghosh [1982] 1 QB 1053 was not the correct one.

Ultimately, Mr Ivey did not receive the winnings that he claimed.

The Test

The criminal test for dishonesty has for many years rested on the idea that there is a consensus about what is honest and what is dishonest – that there is a shared moral standard in society. In addition, the Ghosh test appeared to suggest that there must be an extra element of cynicism in a dishonest person – in that they must have been aware that others would brand their conduct dishonest. Those that did not have this awareness would be entitled to an acquittal.

The two-limbed Ghosh test, required juries to decide whether a defendant’s behaviour was dishonest by the standards of reasonable honest people, and to decide whether he or she knew that the behaviour was dishonest by those standards.

The Supreme Court has said that this second step was confusing, unnecessary and the result of an incorrect analysis of previous case law.

Instead, Hughes LJ placed a great deal of trust in the common sense and life experience of juries, trusting that dishonesty would be recognised:

‘Where it applies as an element of a criminal charge, dishonesty is by no means a defined concept. On the contrary, like the elephant, it is characterised more by recognition when encountered than by description.’ [paragraph 48].

Instead, juries should now consider the following:

1. What was the defendant’s actual state of mind or belief at the time of the alleged dishonest behaviour? Juries are asked to consider whether these beliefs were genuinely held.
2. Was the conduct, in light of that state of mind, dishonest by the standards of ordinary, decent people?
   This is set out at paragraph 74 of the judgment:

‘These several considerations provide convincing grounds for holding that the second leg of the test propounded in Ghosh does not correctly represent the law and that directions based upon it ought no longer to be given. The test of dishonesty is as set out by Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan and by Lord Hoffmann in Barlow Clowes:…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 the facts is established, the question of 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.’

In practical terms, point 1 above may have the same evidential basis as previous defences run under the second limb of the Ghosh test. The state of mind, intention, perception and beliefs of the defendant will still be of central importance. In fact, they will be of greater importance as they are the first hurdle for the prosecution to overcome.

The court reasoned that this test would still provide a defence to those who did not have dishonest intent, but that it did not allow defendants to escape conviction on the basis that their own standards of integrity were so warped that they were no longer aware of society’s norms of honesty. The judgment makes reference to traders who had behaved dishonestly, but due to the environment in which they were operating, were unable to recognise that the rest of society would think of their actions as dishonest. This is not a defence.

Is Ivey Obiter?

The Supreme Court had not been invited to decide the definition of dishonesty, however, it is likely to be adopted by the lower courts.

Sir Brian Leveson expressed the same view in the case of Director of Public Prosecutions v Vicky Patterson [2017] EWHC 2820 (Admin) stating at paragraph 16:

‘These observations were clearly obiter, and as a matter of strict precedent the court is bound by Ghosh, although the Court of Appeal could depart from that decision without the matter returning to the Supreme Court…given the terms of the unanimous observations of the Supreme Court expressed by Lord Hughes, who does not shy away from asserting that Ghosh does not correctly represent the law, it is difficult to imagine the Court of Appeal preferring Ghosh to Ivey in the future.’

Civil Proceedings

In his judgment in Ivey, Hughes LJ argued that there was no principled reason as to why the test for dishonesty had been different in criminal cases and civil cases – an argument frequently rehearsed in regulatory proceedings in recent years.  After all, either something is dishonest, or it isn’t. Why should the forum in which the argument takes place alter the meaning of dishonesty?

The case of Ivey brings the criminal and civil law into alignment.

Professional Regulatory Proceedings

While it applies to criminal proceedings, this case will also change the way that professional regulators pursue charges involving dishonesty. Given that the criminal test of dishonesty had been essentially adopted in the quasi-criminal sphere of regulatory law, the Ivey test now also applies in professional regulatory proceedings.

The High Court in a recent decision in the case of General Medical Council v Dr Kennedy Krishnan [2017] EWHC 2892 (Admin) at paragraph 24 held that the Ivey test should be applied in proceedings at the General Medical Council.

There was a suggestion by Mostyn J in the case of Kirschner v General Dental Council [2015] EWHC 1377 (Admin) that there should be a unified test for dishonesty, and that the civil test should apply in regulatory proceedings:

‘In my opinion there should be but one test for dishonesty in all civil proceedings, whatever their nature. That test should be as propounded by the Privy Council in Barlow Clowes…’

Ultimately it is the test in Hussain v General Medical Council [2014] EWCA Civ 2246 that came to be the preferred test, namely that:

‘The tribunal should first determine whether on the balance of probabilities, a defendant acted dishonestly by the standards of ordinary and honest members of that profession; and, if it finds that he or she did so, must go on to determine whether it is more likely than not that the defendant realised that what he or she was doing was by those standards, dishonest.’

This essentially mirrored the Ghosh test, but imposed the standards of fellow professionals.

The result of the judgment in Ivey is that courts and regulatory tribunals will now all apply the same standards of dishonesty. It is not clear whether the slight modification from the case of Hussain still survives.