The Supreme Court has used a dispute over gambling winnings (Ivey v Genting Casinos (UK) Ltd (t/a Crockfords) [2017] UKSC 67) to overhaul the well-established legal test for dishonesty in criminal cases.

This marks a significant change in the landscape of criminal, civil and professional misconduct law and will be of interest to many practitioners, students and teachers of law.

The facts

During the course of ‘a carefully planned and executed sting’ on a casino, Mr Ivey, a high stakes gambler, had won £7.7 million in 2 days playing ‘Punto Banco’ (a version of Baccarat). The casino investigated audio-visual recordings of the games Mr Ivey had played and concluded that he had cheated. They refused to pay.

I’m probably worse at describing card games than I am at playing them, but in brief, Punto Blanco involves randomly drawn cards taken from a shoe by a croupier and distributed face down to 2 positions on the table. The aim is to get one of the positions to have a combination of two or three cards that amount to 9 (or are closer to 9 than the other position). Gamblers place bets on either position being closer to 9.

Mr Ivey used a highly sophisticated technique known as ‘edge-sorting’ in order to adjust the odds in his favour. This involved tricking the croupier into pre-arranging several specific packs of cards in the shoe that are then sorted so that a sharp-eyed player can spot the good cards by a careful examination of the printed patterns on the reverse of each card.

The law

The Court charted the history of gaming legislation from the Reformation onwards – including the use of the corporal punishment for cheating in the time of Queen Anne – and into the modern era governed by the Gambling Act 2005.

In applying section 42 of the 2005 Act, the Hight Court and Court of Appeal found that Mr Ivey had been cheating. He had therefore breached an implied term in the contract not to cheat and could not recover the £7.7 million he had ‘won’.

The arguments on appeal

Mr Ivey appealed on the basis that cheating required ‘dishonesty’ and that the case law (namely R v Ghosh [1982] QB 1053) required that Mr Ivey believed that he was behaving dishonestly. The High Court had found that Mr Ivey believed that he was not cheating, and therefore the crucial subjective requirement in the Ghosh test was not satisfied.

The argument relied on an analogy with the now abolished common law offences of ‘cheating’ and ‘conspiracy to defraud’, both of which required dishonesty.

Discussion

In the only judgment given by Lord Hughes, the Court found that the offence of ‘cheating’ under gambling law had a separate history to that of ‘cheating’ under the common law. Dishonesty was not required. It was possible to cheat in sports or games without being ‘dishonest’ or requiring any deception (para 43 and 45).

The Court went on:

It would be very unwise to attempt a definition of cheating. No doubt its essentials normally involve a deliberate (and not an accidental) act designed to gain an advantage in the play which is objectively improper, given the nature, parameters and rules (formal or informal) of the game under examination.

In a similar way, ‘dishonesty’ under the criminal law is not a strictly defined concept but a question of fact and standards left to the jury to decide. Juries would know it when they saw it. The addition of dishonesty to section 42 of the Gambling Act 2005 would simply complicate the value-laded question of whether or not a person was cheating with yet another value judgment.

However, even if dishonesty were a proper ingredient to the offence in section 42 of the 2005 Act, the Court was satisfied that Mr Ivey had acted dishonestly. To understand why, we need to consider the Court’s views on the test of dishonesty.

The ‘dishonesty’ test

The Court discussed how dishonesty features in many acquisitive crimes. The well-established Ghosh test requires a 2 stage consideration:

  1. Whether the conduct was dishonest by the standards of ordinary, reasonable and honest people (sometimes called the ‘objective test’); and
  2. If so, whether the Defendant must have realised that ordinary, honest people would consider his / her behaviour dishonest.

Both requirements must be satisfied before a person can be convicted of a dishonesty offence.

At paragraph 57, the Court outlined a number of problems that have arisen in the 30 years that courts have used the Ghosh test, including the difficulties of connecting criminal liability with the actual state of mind of the Defendant and their own standards of honesty.

It is the second part of the test which mixes subjective and objective approaches, gives rise to these problems. The trouble with this approach is that:

…the capacity of all of us to persuade ourselves that what we do is excusable knows few bounds. (para. 59)

By contrast, under the civil law, what the Defendant thinks about honest standards in society is irrelevant and dishonesty is decided on an objective basis (see Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37 at page 1479-1480).

The Court noted that there was no principled basis for the difference in the meaning of dishonesty as between criminal and civil cases (as opposed to the standard of proof that must be met).

Conclusions

After a detailed discussion of the case law prior to Ghosh, the Court concluded (at para. 74) that the correct approach is to:

  • determine what the Defendant actually knew of believed as to the facts. Whether the Defendant’s beliefs were reasonable are not a separate issue – but goes to whether the beliefs were genuinely held;
  • decide whether the Defendant’s conduct is dishonest by the standards of ordinary, reasonable and honest people;
  • There is no further requirement that the Defendant knew or appreciated that he or she acted dishonestly.

Applying this modified test, Mr Ivey had acted dishonestly because his beliefs as to his honesty were irrelevant. Although the High Court had found him to be a truthful witness, that did not make his conduct, (deceiving the croupier into giving him an advantage he should not have had), honest.

Comment

This is an interesting case for its impact across criminal, civil and professional misconduct matters. It comes at a time when there are calls for a combined fraud court enabling users to determine questions of both criminal and civil liability for fraud and cyber crime. As such, the harmonisation of the criminal and civil test of dishonesty helps to pave the way for a combined fraud court to operate more smoothly and better serve the public, although it should be noted that wider structural issues of equal access to justice remain unresolved.

Posted by Ben Amunwa

Founder and editor of Lawmostly.com. Ben is a business and public law barrister with the 36 Group. He gives expert legal advice on employment, immigration and commercial disputes to a wide range of clients.

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