In a surprising Supreme Court judgment concerning a civil dispute over gambling winnings, the leading criminal case on dishonesty, R v Ghosh, was heavily criticised, deemed not to correctly represent the law and “judicial directions based upon it ought no longer to be given”. This judgment will impact on all future cases where dishonesty is an issue. Perhaps the most surprising aspect of this decision was the largely uncontroversial nature of the “Ghosh test”, which had neither seen sustained criticism of its fairness, nor any apparent difficulty with its application.
Edge sorting:
The facts of the case would not have appeared out of place in a James Bond movie. In Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67, the appellant was a professional high-stakes gambler and the respondent was a London casino. The appellant visited the casino with an associate and engaged in a card game known as Punto Banco, a variant of Baccarat. The different odds applied to certain bets means that the casino enjoys a small advantage taken over all the play.
The appellant won a sum in excess of £7m, from a £1m stake. After conducting investigations, the casino refused to pay the winnings, on the basis that the appellant had cheated by using a process known as “edge sorting” (for more information see Legal update, Judging criminal dishonesty no longer involves a subjective test (Supreme Court)).
The appellant subsequently sued the casino to recover the winnings. In subsequent litigation (Ivey v Genting Casinos [2016] EWCA Civ 1093) the High Court held that the appellant’s use of edge sorting was cheating. The case was referred to the Supreme Court.
Criminal dishonesty:
In one of the most famous cases in criminal law, R v Ghosh [1982] EWCA Crim 2, the court stated that the test for dishonesty under the Theft Act 1968 was a two stage test to determine whether a defendant had acted dishonestly:
- A jury had to first 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 the prosecution would fail. This is known as the objective test.
- If it was dishonest by those standards, then the jury had to consider whether the defendant himself had to have realised that what he was doing was, by those standards, dishonest. This is known as the subjective test.
The subjective test is purely focused on whether the defendant knew what he was doing was dishonest or would be considered dishonest by others, rather than morally justified.
During the trial process, it is not necessary to provide a Ghosh direction to the jury in every case (R v Price [1990] 90 Cr App R 409). The full direction is only required in situations where “the state of the evidence is such that the offender might have believed that what he or she is alleged to have done was in accordance with the ordinary person’s view of honesty”. It is not often invoked or required in criminal trials. When the direction is required, the exact form of words from the Ghosh case is necessary and a failure to direct the jury on this is likely to result in a successful appeal. For more information on dishonesty see Practice note, Theft, basic offence.
The Supreme Court:
The Supreme Court unanimously dismissed the appeal. The judgement stated that it was common ground that the parties’ contract for betting contained an implied term that neither of them would cheat. The claimant had staged a carefully planned and executed operation that amounted to cheating. It would clearly be a cheat to secretly gain access to the shoe of cards and rearrange them: the same result was achieved here by directing the actions of the croupier unwittingly to do the same thing.
More significantly, the court examined the concept of dishonesty, and held that the second leg of the rule adopted in Ghosh has serious problems:
- 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.
- 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.
- It sets a test which jurors and others often find puzzling and difficult to apply.
- 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.
- It represented a significant departure from pre-Theft Act 1968 law, when there is no indication that such a change had been intended.
- 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 judgement of jurors or magistrates.
- 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, as a purpose of the criminal law is to set acceptable standards of behaviour.
In civil cases there is an objective test of dishonesty, arising from Barlow Clowes International Ltd (In Liquidation) v Eurotrust International Ltd [2005] UKPC 37. In Ivey, the Supreme Court stated that this test should also be adopted in criminal matters, as “there can be no logical or principled basis for the meaning of dishonesty to differ according to whether it arises in a civil action or a criminal prosecution”.
The Supreme Court judgement, technically obiter, went further to suggest the second leg of the test in Ghosh does not correctly represent the law and judicial directions based upon it ought no longer to be given.
What are the implications for criminal law?
This is the most significant cases in relation to dishonesty in the past 35 years, effectively ruling that the two stage test in R v Ghosh used to determine whether an action is dishonest is incorrect, and substituting it with a different test:
“The test of dishonesty is now that of the standard in civil actions. The fact-finding tribunal must ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts and then determine whether his conduct was honest or dishonest by 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”.
This new test removes the requirement for the Crown to prove that the defendant knew or believed that what he did was dishonest, or any element of mens rea, from offences of dishonesty.
There is unlikely to be any immediate impact. In contrast to another recent case, R v Jogee [2016] UKSC 8 (18 February 2016) where the Supreme Court held that the concept of joint enterprise had been miscast for a number of years, there is not likely to be a flood of cases suggesting wrongful imprisonment, nor has there been longstanding criticism of and campaigns against the former interpretation of dishonesty.
Going forward, the practical impact seems to make prosecuting cases involving dishonesty slightly easier. In most cases the second limb does not become an issue, but can have a significant impact, particularly on minor naïve conspirators who are perhaps assured by more senior colleges that their actions are standard practice and not dishonest. Similarly, those with a genuine belief that their actions are perfectly normal (for example, a foreign national unaware that travelling on public transport required payment) risk being caught by the change. In addition, the notion there is an “unprincipled divergence between the test for dishonesty in criminal proceedings and civil action” is curious. There are a huge number of divergences between criminal and civil law for obvious reasons, not least the risk to a person’s liberty.
It will remain the right of a jury to acquit someone regardless of the judge’s direction, and of course the Crown must still consider whether it is in the public interest to prosecute someone who has made a genuine mistake in undertaking an objectively dishonest action. The test in R v Ghosh provided an important, even if rarely used, safeguard for defendants that may now be lost. Its removal has the potential to criminalise the innocent.
Moreover, to suggest that the law should not excuse those who make a genuine mistake about contemporary standards of honesty, is somewhat authoritarian and contrary to liberal tradition. Juries are occasionally reminded that a criminal court is not a court of morals, a stricture which appears to have slipped some judicial minds. To suggest that a purpose of the criminal law is to set acceptable standards of behaviour is to confuse criminality and morality, and a step on a dangerous path.