UK: "Dishonesty" At The Cutting Edge: Supreme Court Overrules Ghosh

In Ivey v Genting Casinos [2017] UKSC 67 (Ivey), the Supreme Court revisited the test for dishonesty that has been applied in criminal cases for more than 30 years. 

Prior to this decision, to be considered dishonest to the criminal standard, individuals' actions needed to be dishonest according to the objective standards of the ordinary reasonable and honest person, and, if so, they themselves had to have appreciated that to be the case 

Now, as a consequence of Ivey, the Court has raised the prospect of individuals being found to have been "dishonest" even though they themselves believed in the propriety of their actions. 

The Court's decision also confirmed that dishonesty is not a necessary element of the offence of "cheating" at gambling under section 42 of the Gambling Act 2005.

Facts

The case centred on the "edge-sorting" technique that the renowned poker player Phil Ivey deployed at a Genting's casino, "Crockfords", to make approximately £7.7 million in winnings playing the card game "Punto Banco". Edge-sorting takes advantage of the fact that some playing card decks are machine-cut with marginally more or less of the back-face design print along the left than the right edge of the cards, resulting in an asymmetric pattern on the back of the cards. By claiming superstition, Ivey and his associate were able to get the dealer at Crockfords to turn over certain cards differently from the others, resulting in them being rotated 180 degrees, and allowing them to be identified once the deck was dealt again. Knowing that a particular face-down card is one of a handful of cards of particular value significantly increased Ivey's chances of winning subsequent hands.   

On working out the secret to Ivey's success, the casino argued that "edge-sorting" amounted to "cheating" and so made the resultant winnings irrecoverable based on Ivey having breached an implied term of the betting contract, or alternatively because they were the proceeds of crime. Ivey therefore issued a claim to recover his winnings.

The principal questions before the Supreme Court were:

1. whether "cheating" necessarily involves dishonesty; and

2. if so, whether Ivey must be found to have been honest, given that the trial judge had found him to be "genuinely convinced" that edge-sorting was a form of "legitimate gamesmanship", and not cheating.

Judgment

On the first point, Lord Hughes, giving the judgment of a five-judge Supreme Court, held that dishonesty is not an element of cheating, whether under the Gambling Act 2005 or under any implied term of the betting contract.

On the second point, the Court concluded that even if dishonesty were an element of cheating, the trial judge's finding as to Ivey's views on edge-sorting did not mean that he had been "honest". In so concluding, the Court disapproved the second limb of the classic test for dishonesty set out in R v Ghosh [1982] QB 1053. That limb required that a defendant must have appreciated that ordinary people would regard his conduct as dishonest. According to the Supreme Court, however, the proper approach to dishonesty is as follows:

"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.

Conclusions

Strictly, the Court's comments on Ghosh were not part of the decision as the Court's conclusion on the first question was enough to resolve the appeal. Nevertheless, juries are already being directed on the basis that the Ghosh test no longer applies. The Ivey judgment signifies a major change in the law, although it remains to be seen whether it will yield dramatically different verdicts from juries.

Notably, whilst the judgment removes the so-called "subjective" limb of the Ghosh test, dishonesty is still assessed on the basis of what the defendant subjectively knew or believed about the underlying circumstances – as distinct from what he subjectively thought about them when applying the ordinary standards of others. Ivey confirms that it is open to a jury to conclude that defendants acted dishonestly, even where they may genuinely have thought that they were behaving honestly.