Dishonesty in the UK


By McDowell Purcell \ In All Posts, Public & Regulatory

The UK Supreme Court has recently clarified the correct test for dishonesty in both criminal and civil cases in the UK.

The Case:

The case of Ivey v Genting Casinos, [2017] UKSC 67, considered whether Mr. Ivey had cheated whilst playing Punto Banco Baccarat at the defendant’s casinos. The casino refused to pay Mr. Ivey his winnings of £7.7 million on the basis that he had cheated by persuading the croupier to sort the cards in such a way that he could engage in ‘edge sorting’. This related to tiny variations in the edges of the cards that could reveal whether the card was of a high value or not. This gave Mr. Ivey a distinct advantage in the game. The court found that it was cheating and also took the opportunity to clarify the law in relation to dishonesty.

The Current Criminal Test:

Since 1982 the UK criminal courts have instructed juries to adopt a two-stage test for dishonesty.  First, it must ask whether in its judgment the conduct complained of was dishonest by the lay objective standards of ordinary reasonable and honest people. If the answer is no, that disposes of the case in favour of the defendant. If the answer is yes, it must ask, secondly whether the defendant must have realised that ordinary honest people would regard his behaviour as dishonest.

The Problems:

Lord Hughes, speaking for a unanimous court, set out six problems with the second stage of the test in Ghosh:-

  1. The effect was that the more warped the defendant’s standards of honesty are, the less likely it is that they will be convicted.
  2. It was based on the mistaken premise that criminal responsibility for dishonesty must depend on the actual state of mind of the defendant.
  3. The test is puzzling and difficult for jurors to apply.
  4. It has led to an unprincipled divergence between the test for dishonesty in civil and criminal actions.
  5. It represented a significant departure from the pre-Theft Act 1968 law, when no departure was intended.
  6. It was not compelled by authority.

In relation to the first identified problem he held that there was no reason why the law should excuse those who make a mistake about what contemporary standards of honesty are. It is a function of the criminal law to determine what is criminal and what is not. Its purpose is to set the standards of behaviour which are acceptable.

The Current Civil Test:

The Court went on to set out the different position in civil cases where an objective test has been adopted. The test has been clearly established in a series of civil cases and was set out by the House of Lords, sitting as the Privy Council, in Barlow Clowes v Eurotrust, [2005] UKPC 37.

“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 Court of Appeal held this to be a correct state of the law and their Lordships agree.”

The Court decided that there was no logical or principled basis for the meaning of dishonesty to differ depending on whether it arises in a criminal or a civil case. Having considered the case law since Ghosh, the Court held that there were convincing grounds for holding that the second leg of the test propounded in Ghosh does not correctly represent the law. The test as set out in Barlow, above, is the correct one for both criminal and civil dishonesty.

The Correct Test:

Therefore in both criminal and civil cases where the question of dishonesty arises, the Court found that the following approach should be adopted:-

  1. The fact-finding tribunal must first ascertain the actual, subjective, state of the individual’s knowledge or belief as to the facts.
  2. The reasonableness or otherwise of their belief is a matter of evidence going to whether they held the belief, but it is not an additional requirement that their belief must be reasonable. In practice this is often determinative.
  3. The question is whether it is genuinely held.
  4. When once their actual state of mind as to knowledge or belief as to facts is established, the question whether their conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards of ordinary decent people.
  5. There is no requirement that the defendant must appreciate that what they have done is, by those standards, dishonest.

Author: Barry Magee