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Dishonesty - in the eye of the beholder?

  • United Kingdom
  • Fraud and financial crime

27-10-2017

On 25 October the Supreme Court handed down a decision which fundamentally changes the 'Ghosh' test, the two stage process for determining dishonesty in criminal proceedings applied by the courts for the past 35 years.

In Ivey v Genting Casinos ([2017] UKSC 67), Mr Ivey, a professional gambler, sued Genting Casinos for winnings of £7.7 million won during a game of Punto Banco Baccarat in August 2012. The casino refused to pay out the winnings, claiming Mr Ivey had cheated.

Mr Ivey was found to have used a technique known as “edge sorting” where the player observes subtle differences in the patterns on the backs of the cards and is able to convince an unwitting croupier to sort the cards accordingly. In doing so, the player greatly increases their chances of winning as the player is able to determine the card number. Crucially, whilst Mr Ivey denies cheating he does not deny his actions claiming the technique creates a legitimate advantage.

The casino alleged that Mr Ivey had “cheated” thereby breaching an implied term in the contract for betting. They also argued that his actions amounted to a criminal offence under s 42 of the Gambling Act 2005. Mr Ivey contended that cheating required dishonesty and under the Ghosh test he had not been dishonest as he himself did not regard the behaviour as dishonest.

In his judgment Lord Hughes set out the two stage Ghosh test, determined in the 1982 case of R v Ghosh [1982] QB 1053:

  1. Was the conduct complained of dishonest by the lay objective standards of ordinary reasonable and honest people? and
  1. Did the defendant realise that ordinary honest people would so regard the behaviour?

Lord Hughes goes on to detail six issues with the second part of the Ghosh test particularly objecting to the tests’ reliance on the accused’s own standard of honesty. The more “warped” the accused’s personal standards of honesty are, the less likely he will be found to have behaved dishonestly.

The court held therefore that the second limb of the test is unnecessary. Only the objective standard of an honest person will now be considered. This brings the test in criminal proceedings in line with the test in civil actions.

In light of this Mr Ivey was considered to have cheated and his appeal was dismissed. This case is a significant change in the test for dishonesty, removing the requirement for courts to consider the accused’s own judgment of their behaviour. The accused can no longer rely on their own personal beliefs or moral standards.

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