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28.07.18

The new test for dishonesty: the impact of Ivey v Genting Casinos

Last year's Supreme Court judgment in Ivey v Genting Casinos [2017] UKSC 67, a civil claim, shocked many criminal law practitioners as it formulated a new test for determining the element of ‘dishonesty’ for use in both civil and criminal Proceedings.

Prior to Ivey the case of R v Ghosh [1982] EWCA Crim 2 had been widely recognised by judges when directing juries on determining whether ‘dishonesty’ was established (in cases where it is a requisite element such as theft and fraud).  The "Ghosh Test" laid down a two-part test which required juries to consider:-

  1. Whether the conduct complained of was dishonest by the lay objective standards of ordinary reasonable and honest people; (the "objective test") and, if yes,
  2. Whether the defendant must have realised that ordinary honest people would so regard his behaviour ("the subjective test").

In order to find a defendant guilty, a jury would have to be sure beyond reasonable doubt that the answer to both questions was yes.

In Ivey the Supreme Court Justices held that the second question in the Ghosh Test (i.e. the subjective test) did ‘not correctly represent the law and that directions based upon it ought no longer to be given by judges to juries’.

Ivey concerned a claim brought by Phil Ivey, a professional poker player, against Genting Casinos.  The casino had refused to pay him his winnings of £7.7million because they said he had cheated.  Mr Ivey used a technique called ‘edge-sorting’ where he would observe the unintentional differences on the backs of some types of card and then manipulate the placement of high value cards in the "shoe".  He did this by asking the croupier to place certain cards in a different direction, ostensibly on the grounds of superstition.  The croupier humoured him, acceding to his request because he was a known and valued high-stakes player.

The parties agreed that a contract for betting included an implied term that neither party would cheat.  Mr Ivey argued that ‘cheating’ required an element of dishonesty, which he said the casino had not established.  We reported on the 2014 High Court first instance decision here.  Mr Justice Mitting concluded that Mr Ivey was cheating and found against him.  The Court of Appeal agreed.  Mr Ivey appealed to the Supreme Court

In determining whether Mr Ivey was cheating the Supreme Court stepped back and considered the wider definition of dishonesty.  The new test removes the requirement that ‘the defendant must appreciate that what he has done is, by those standards, dishonest’.

The Court held that they:-

  • 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 may evidence 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.’

Once that had been established they:-

  • must determine ‘whether his conduct was dishonest by applying the objective standards of ordinary decent people. It is not necessary for the individual to appreciate that what he has done is, by those standards, dishonest.’

The Court summarised its concerns with the Ghosh Test in its press summary, "...the second leg of the rule adopted in Ghosh has serious problems. The principal objection is that the less a defendant’s standards conform to society’s expectations, the less likely they are to be held criminally responsible for their behaviour. The law should not excuse those who make a mistake about contemporary standards of honesty, a purpose of the criminal law is to set acceptable standards of behaviour."

Applying its interpretation to Mr Ivey's case, the Supreme Court held that if cheating at gambling required an additional legal element of dishonesty, that it had been satisfied in his case. Accordingly, the appeal was dismissed.

A full copy of the judgment can be found here and a video of the judgment summary can be found below:-

[embed]https://www.youtube.com/watch?v=fixGhSsfl-Y[/embed]

The effect of the decision in Ivy is profound, particularly in criminal law where defendants may now struggle to avoid criminal liability based on their own personal perception of dishonesty.  Whilst this decision is significant in this regard, it brings dishonesty offences more in line with the mens rea requirements of many other criminal offences.

 

Visit our website to see how Brett Wilson solicitors can assist you with civil fraud claims or defending criminal investigations/prosecutions.


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Articles are intended as an introduction to the topic and do not constitute legal advice.


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