The Supreme Court unanimously dismissed the appeal of Mr Ivey, the appellant, to recover winnings of £7.7million from a 2012 game of punto banco in Crockfords Club, Mayfair.
The appellant admitted using a specialist technique called ‘edge sorting’ and argued that this technique was ‘legitimate gamesmanship’. ‘edge sorting’ involves spotting and exploiting subtle unintentional differences on the back of certain brands of playing cards. While the appellant did not touch any of the playing cards directly, he persuaded the croupier to rotate the most valuable cards by intimating that he was superstitious.
The appellant unsuccessfully attempted to recover his winnings by bringing an action against the club and also failed with an appeal to the Court of Appeal.
The appeal made to the Supreme Court was on the basis that the appellant did not consider his actions to be cheating and therefore the second limb of the dishonesty test laid down in R v Ghosh [1982] QB 1053 was not made out.
The Supreme Court upheld the decision of the Court of Appeal that the appellant’s actions amounted to cheating. In arriving at this judgment, the court specified that the actions taken by the appellant to fix the deck were dishonest and that there was no longer a requirement for a defendant to have realised that his actions were dishonest; effectively confirming that the two-stage approach in Ghosh is no longer the correct approach when considering the issue of dishonesty.
R v Ghosh [1982]
The previous two-stage test for determining dishonesty was explained in Ghosh by Lord Lane CJ as:
"In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.
If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest."
The second stage of the test in Ghosh places an emphasis on the defendant’s actual state of mind and whether the defendant realised that they were acting dishonestly. The justification of this approach is explained by Lord Hoffman in the case of Twinsectra v Yardley and Others [2002] 2 AC 164. At paragraph 20 Lord Hoffmann stated to satisfy the principles of dishonesty, you “require a dishonest state of mind, that is to say, consciousness that one is transgressing ordinary standards of honest behaviour”.
Ivey (Appellant) v Genting Casinos (UK) Ltd
The case of Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37, further considered the correct approach to take when considering the issue of dishonesty. The Privy Council held that the Twinsectra test only meant that “his knowledge of the transaction had to be such as to render his participation contrary to normally acceptable standards of honest conduct. It did not require that he should have had reflections about what those normally acceptable standards were.”
As such, the Court identified in Barlow Clowes simply states that an objective approach to determining dishonesty should be taken. The Court stated:
“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 Supreme Court decision in Ivey states that the correct test of dishonesty is that which is specified in Barlow Clowes, effectively removing the subjective element of considering a defendant’s state of mind at stage two of Ghosh. However, a closer look at the court’s decision highlights that a subjective approach by the fact-finding tribunal will first ascertain the state of mind of the individual. The objective test will then be applied on whether the individuals conduct was dishonest by the standards of ordinary decent people. The court stated:
“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.”
Professional disciplinary hearings
However, professional disciplinary proceedings tended to use the two-stage approach in Ghosh, though this had been subject to much debate and scrutiny.
In Kirschner v GDC [2015] EWHC 1377 (Admin), Mostyn J expressed his discomfort regarding the Ghosh approach taken to dishonesty in professional disciplinary proceedings. He stated:
“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…”
However, he held that he was bound by the decisions in Bryant & Another v The Law Sociaty [2007] and Hussain v General Medical Council [2014] EWCA Civ 2246; and applied the following two-stage Ghosh test:
“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.”
The Supreme Court judgment in Ivey highlights that the approach to be taken in cases involving dishonesty should be the same, which includes professional disciplinary proceedings. At Paragraph 63, the judgment states:
“Dishonesty is a simple, if occasionally imprecise, English word. It would be an affront to the law if its meaning differed according to the kind of proceedings in which it arose.”
Conclusion
It is clear that the decision of the Supreme Court in Ivey is a landmark one and provides a definitive test for the question of dishonesty. It is hoped that this brings to an end the long line of recent decisions which have variously endorsed, criticised and/or modified the Ghosh test.
In practical terms, the decision is unlikely to dramatically alter the approach to defending the majority of professional disciplinary cases involving allegations of dishonesty. In our experience most cases turn on the questions of whether a) there is sufficient evidence to prove that the alleged conduct actually took place; or b) that what is alleged by a regulator is actually objectively dishonest.
In those cases which would have previously turned on the subjective limb of Ghosh, it seems that it remains open to a respondent to argue that they did not believe their actions to be dishonest. However, in those cases it will now likely prove easier for a regulator to prove their case.
By Martin Haisley, professional misconduct & regulation team
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