In the case of Ivey v Genting Casinos (UK) LTD t/a Crockfords [2017] the Supreme Court effectively re-wrote the test for dishonesty. It removed the second, subjective limb of the current test. This has a significant impact, as it has resulted in one single standard dishonesty test across civil, criminal and regulatory cases.
This decision will have huge implications for anyone facing an allegation of dishonesty by their regulator.
But what does this mean in reality and how will it affect future cases?
Dishonesty – the two stage test under Ghosh
Only 4 weeks ago we examined the two stage test for dishonesty as established by R v Ghosh [1982]. Ghosh set the test as follows:
1. Was the conduct complained of dishonest by the lay objective standards of ordinary reasonable and honest people?
2. If yes, whether the defendant must have realised that ordinary honest people would so regard his behaviour as dishonest?
The case of Hussein v GMC [2014] refined this test for professional misconduct cases, confirming the second part should be assessed against a reasonable and honest member of that particular profession.
Ivey v Genting – a new era?
The Facts
Mr Ivey was a professional gambler. He enlisted the help of another professional gambler, Ms Sun, to use a technique called ‘edge-sorting’ to increase his chances of success in a card game called ‘Punto/Banco’. Mr Ivey and Ms Sun used this technique at Crockfords casino and over the course of two days managed to win £7.7 million.
Edge-sorting involves using the pattern on the back of the cards to identify if they are ‘good’ or ‘bad’. The technique can only be used on certain cards where the pattern on the back is not completely symmetrical. It also involves turning the cards so that the ‘good’ cards are all one way and the ‘bad’ cards the other. However, in the game of Punto/Banco the gambler cannot touch the cards. Ms Sun therefore persuaded the croupier to turn the cards claiming this was a superstition of hers. Casinos often allow for such superstitions. As Mr Ivey had not touched the cards he felt his actions were akin to simple recognising a pattern and using that to his advantage. The court did not agree. They distinguished this conduct, which would not be dishonest, to his conduct, in which he actively re-arranged the cards.
Due to the high value of the winnings, Crockfords undertook an investigation in to the matter; the investigation discovered the pair had used the edge-sorting technique, a technique the casino had never before heard of. Crockfords therefore refused to pay Mr Ivey his winnings saying his conduct was cheating, instead returning his original stake only of £1 million.
My Ivey disputed that his conduct was cheating. He referred to it as a ‘deployment of a perfectly legitimate advantage’ over the house. The court found that he genuinely believed this to be true but as stated above felt the technique deployed was in fact dishonest. The question therefore, was whether his genuine belief was a factor to be considered when establishing if his actions were dishonest.
Judgment
At paragraph 57 of the judgment, the Supreme Court highlighted the issues with the two stage Ghosh test, namely that:
1. It has the unintended effect that the more warped the defendant’s standards of honesty are, the less likely it is that he will be convicted of dishonest behaviour.
2. It was based on the premise that it was necessary in order to give proper effect to the principle that dishonesty, and especially criminal responsibility for it, must depend on the actual state of mind of the defendant, whereas the rule is not necessary to preserve this principle.
3. It sets a test which jurors and others often find puzzling and difficult to apply.
4. 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.
5. It represented a significant departure from the pre-Theft Act 1968 law, when there is no indication that such a change had been intended.
6. Moreover, it was not compelled by authority. Although the pre-Ghosh cases were in a state of some entanglement, the better view is that the preponderance of authority favoured the simpler rule that, once the defendant’s state of knowledge and belief has been established, whether that state of mind was dishonest or not is to be determined by the application of the standards of the ordinary honest person, represented in a criminal case by the collective judgment of jurors or magistrates.
They found that Ghosh had tangled the previous decisions, concluding that there was an objective and subjective test to the question of dishonesty. The court went on to formulate the two stage that has since been relied upon.
The Supreme Court held that whilst there was an objective and subject element to the question, this was all part of the same fact finding exercise to determine if a defendant was dishonest. At paragraph 74 they state:
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.
In essence this means that a court can consider a defendant’s state of mind but that ultimately whether he has been dishonest should be assessed against the standards of ordinary decent people.
Conclusion
Given this sudden judgment, we are yet to see what the ramifications are. The question in professional misconduct cases is likely to be whether the refined Hussein test will still apply, namely whether the standards of ordinary decent people will be substituted for a reasonable and honest member of that particular profession.
If you have a professional misconduct case concerning dishonesty and would like advice, contact Laura Pearce on 0207 388 1658 or by email at This email address is being protected from spambots. You need JavaScript enabled to view it..
Laura Pearce, Senior Solicitor