Oh Ghosh! Criminal dishonesty changed by a gambler!

The Supreme Court has recently sent shockwaves through the criminal legal test of dishonesty by effectively abolishing the second limb of the Ghosh test which has been used to prove or disprove dishonesty since 1982, and consequently ruling that a defendant does not have to realise that their actions fall far below the standard of a “reasonable and ordinary person”. Through Lord Hughes’s obiter remarks in Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67, it appears that the criminal test for dishonesty will now mimic that of the civil law and Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37.

Facts of the Ivey v Genting Casinos case

On 20 and 21 August 2012, Mr Ivey, a professional gambler, and his associate, Ms Sun, played Punto Banco at Crockfords Casino. Mr Ivey openly admitted to the use of “edge sorting” during this game; a technique which gave him an advantage over the casino. The pair claimed to be superstitious, and convinced the croupier to rotate the edges of the ‘good’, i.e. high value, playing cards, by claiming they were lucky, before they were returned to the deck. This meant that all ‘good’ cards were rotated in the same way. Mr Ivey could now identify high value cards and his betting accuracy increased sharply. Mr Ivey’s total winnings over the course of two days’ gambling was £7.7m. Nine days after play, Crockfords told Mr Ivey they would not pay his winnings because the game had been compromised ([4] – [27]).

Mr Ivey brought a civil claim against the casino, claiming that he was entitled to his winnings. The casino’s defence was that:

1. No game of Punto Banco had been played because the rules required the dealt cards to be random, whereas Mr Ivey knew what they were likely to be
2. There was an implied term that Mr Ivey would not cheat and that term had been broken
3. Mr Ivey had committed the criminal offence of cheating under the Gambling Act 2005 section 42 by interfering with the game, or deceiving the croupier, and so was disentitled to found his claim on his own criminal conduct.

Mr Ivey had committed the criminal offence of cheating under the Gambling Act 2005 section 42 by interfering with the game, or deceiving the croupier, and so was disentitled to found his claim on his own criminal conduct.

Mr Ivey admitted the implied term but claimed that he was not cheating, but deploying of a perfectly legitimate advantage. The Court at first instance, as well as the majority of the Court of Appeal, concluded that he was cheating and therefore dismissed his claim. Mitting J’s key substantive conclusions can be summarised from the original Judgment ([45], [50] – [51]) :

1. Dishonesty was not a necessary ingredient of cheating under The Gambling Act 2005;
2. Ivey’s conduct objectively constituted cheating;
3. Ivey was “genuinely convinced that he is not a cheat.”

Mr Ivey appealed on the basis that:

1. Dishonesty is a necessary ingredient of cheating;
2. He was not dishonest, as his genuine belief in his conduct did not meet the second limb of the Ghosh test;
3. Thus, he did not cheat.
However, the Court of Appeal upheld the decision of Mitting J (679 – 680) .

Mr Ivey appealed further to the Supreme Court, where Mitting J’s conclusions were upheld that cheating did not require dishonesty under s.42 of the Gambling Act 2005, however in doing so they considered the meaning of dishonesty as set out in R v Ghosh [1982] EWCA Crim 2.

The previous test for dishonesty as in Ghosh

For the past 35 years, the criminal courts have been bound by the two stage test in Ghosh.

This case involved a surgeon who was convicted for receiving payments for work carried out by others. The Court of Appeal developed a two stage test, which came to be known as the ‘Ghosh test’. In order for a defendant to be found guilty of dishonesty, the jury must consider:

1. Whether according to the ordinary standards of reasonable and honest people what was done was dishonest (the “objective test”); and
2. If it was dishonest by those standards, whether the defendant himself must have realised that what he was doing was by those standards dishonest (the “subjective test”).

This was then adopted into civil law with the case of Twinsectra v Yardley [2002] 2 AC 164, a case involving a claim against a solicitor for dishonest assistance in a breach of trust.

However, this was interpreted by the Privy Council in Barlow Clowes, who confirmed that the test for dishonesty in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 prevents a defendant from using their mental state as an absolute defence:

“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” (pp 1479-1480)

Supreme Court ruling in Ivey v Genting Casinos

Lord Hughes found a number of serious problems with the second limb of the test in Ghosh [57], but that the “principal objection to the second leg of the Ghosh test is that the less the defendant’s standards conform to what society in general expects, the less likely he is to be held criminally responsible for his behaviour.” [58]

In making this finding, Lord Hughes commented that “…the second leg of the test propounded in Ghosh does not correctly represent the law and… 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.” [74].

Therefore “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… 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.” [74]

Following this test, the Supreme Court found that even if cheating did involve the meaning of dishonesty, Mr Ivey would have acted dishonestly, consequently dismissing his claim and effecting a move towards a more simplified description and aligning the legal definition of a common English word more closely to its ordinary meaning. This also had the effect of ending the: “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” [57].

Conclusion

The effect that this case will have within criminal law has already begun, with many lower courts implementing the obiter comments of Lord Hughes whilst they await clarification from the Court of Appeal (Criminal Division). This test may result in more convictions for dishonesty offences, such as those under the Theft Act and Fraud Act, now that the prosecution no longer has the burden of proving that the defendant realised that the ordinary person would believe their conduct to be dishonest.

All paragraph numbers relate to Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67 unless otherwise stated
Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2014] EWHC 3394 (QB)
Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] 1 WLR 679
Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37