The recent Supreme Court judgment in Ivey v Genting Casinos (UK) attracted tabloid headlines.
The Court was composed of five justices: Lord Neuberger, Lady Hale, Lord Kerr, Lord Thomas, and Lord Hughes. They harmonised the civil and criminal test for dishonesty in a decision which will have a profound effect in criminal and professional regulatory cases.
The tabloid interest was understandable. The case had all the features of a James Bond plot, a glamorous casino, a high-rolling gambler, an obscure game of chance and a nefarious strategy to break the house. Mr Ivey sued casino for its failure to honour winnings in the princely sum of £7.7 million.
The complex facts can be reduced to this. Mr Ivey adopted a strategy to maximise his chances of winning which exploited a minor printing error on the rear of the playing cards. He contended his actions were legitimate gamesmanship, but the casino asserted that he was dishonest.
The unanimous Judgment of the Court found in favour of the casino and, unexpectedly, reversed the well-established legal test for dishonesty in criminal cases declaring that the well-known case of Ghosh did not correctly represent the law.
The previous test set out in R v Ghosh, created a two-stage test in relation to dishonesty:
- Was the conduct complained of dishonest by the objective standards of ordinary reasonable and honest people? And if it was:
- Did the defendant at the time of the offence understand that ordinary honest people would so regard their behaviour?
To reach a guilty verdict, a jury needed be sure that the answer to both questions was yes.
The new test imports the civil test for dishonesty delivered in Royal Brunei Airlines Sdn Bhd v Tan and adopted by Lord Hoffmann in Barlow Clowes International Ltd v Eurotrust International Ltd:
‘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.’
Lord Hughes’ elaborated further:
‘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.’ [Para 74]
Why has the Supreme Court made such a momentous change?
Firstly, the contrast between the civil and criminal standard has attracted a number of recent appeals from regulatory tribunals, resulting in a number of conflicting authorities (including Hussain and Lavis). These culminated in Kirchner, in which Mostyn J prophetically announced:
‘In my opinion there should be but one test for dishonesty in all civil proceedings, whatever their nature.’
Secondly, the Ghosh direction is confusing. Juries struggle with it and it is rarely included in jury directions.
Finally, the Court clearly disliked the perverse consequence of the Ghosh test that,
‘that the more warped the defendant’s standards of honesty are, the less likely it is that he will be convicted of dishonest behaviour’ [Para 58]
What relevance does this decision have on healthcare professionals and their lawyers?
Let us not forget, Deb Baran Ghosh was a surgeon. He was convicted of four offences under the Theft Act. It was said that during his work as a locum surgeon he obtained money by claiming private fees for work had been conducted through the NHS or by other practitioners.
Ghosh’s appeal against conviction was on the basis that in the context of his practice, he genuinely believed he was entitled to the consultancy fees he claimed.
This contextual defence, often a feature of representing professional clients both in the criminal courts and before regulators has been limited and is summarised in this part of the Supreme Court judgment:
‘There is no reason why the law should excuse those who make a mistake about what contemporary standards of honesty are, whether in the context of insurance claims, high finance, market manipulation or tax evasion.’ [Para 59]
This changing area of the law emphasises the need for professionals to take appropriate advice during the earliest stages of any investigation.