25 August 2020
Written by: Ian Bridges, PNLD Legal Adviser
Not reviewed after the date of publication
An important requirement to be proved in many criminal offences is whether a person has acted ‘dishonestly’ or not; this applies to fraud offences under the Fraud Act 2006 , the offences under the Theft Act 1968, and many other offences which involve ‘dishonesty’. For example, under section 1 of the Theft Act 1968, a person is guilty of theft if they dishonestly appropriate property belonging to another with the intention of permanently depriving the other of it, and although section 2 provides for circumstances which are not to be regarded as 'dishonest', the term ‘dishonestly’ itself for theft has not been specifically defined in the legislation. As a result, in determining whether a person has acted dishonestly or not, it has been left for a court or jury to decide what is dishonest, and whether a person has acted dishonestly or not.
PNLD Legal Adviser, Ian Bridges, provides an overview of the case law in relation to dishonesty, in particular the recent case of R v Barton and another 2020, which confirmed the overruling of the dishonesty test in R v Ghosh 1982.
Dishonesty was given its ordinary meaning
In R v Feeley 1973, a Court of Appeal case involving theft of money, determined that ‘dishonesty’ was to be given its ordinary meaning, and whether an appropriation was dishonest or not was a question for the jury to decide. This ruling on dishonesty applied for many years until the case of Ghosh.
Ghosh 1982 – The dishonesty test
In the case R v Ghosh 1982, Ghosh was a surgeon, who had been acting as a locum consultant at a hospital, and he claimed fees for work that had in fact been carried out by someone else. As a result, he was charged with attempting to obtain and obtaining money by deception, contrary to section 15(1) (now repealed) of the Theft Act 1968.
His defence was that there was no deception and that he had not acted dishonestly because he was entitled to the money which was due to him as consultation fees. On the issue of dishonesty, the judge directed the jury that they should apply contemporary standards of honesty and dishonesty, and that it was for them to decide, by applying their own standards of honesty, whether G had acted 'dishonestly' or not. He was convicted and he appealed against conviction on the ground that the judge had misdirected the jury as to the meaning of dishonesty.
The Court of Appeal (Criminal Division) determined that there was no misdirection; the jury had rejected Ghosh's evidence on all counts and so dishonesty had to be found.
The resultant Ghosh test for dishonesty under the Theft Act 1968 was both subjective and objective:
Objective test: In determining whether a defendant had acted dishonestly, a jury had first of all to decide, according to the ordinary standards of reasonable and honest people, whether what that person had done was dishonest. If it was not dishonest by those standards, that would be the end of the matter and the prosecution would fail.
Subjective test: If it was dishonest by those standards, then the jury had to consider whether the defendant realised that what he was doing, was by those standards, dishonest.
This case was the basis for the ‘Ghosh dishonesty test’, which was subsequently considered and applied to all criminal cases involving dishonesty, by the police, CPS and courts, over the next 35 years.
Ivey v Genting Casinos (UK) Ltd 2017 – removing the subjective element
In Ivey v Genting Casinos (UK) Ltd (trading as Crockfords) 2017, the UK Supreme Court held that the test for dishonesty should be objective and partly overruled the test outlined in Ghosh.
Ivey was a professional gambler and played a card game of chance known as ‘Punto Banco Baccarat’ at the respondent casino, where he used the highly specialised technique of ‘edge-sorting’, which relied on noting tiny physical differences in the edges of the cards. By claiming to be superstitious, he persuaded the croupier to use the same pack of cards and to turn ‘lucky’ cards around, enabling him to use the technique, which then greatly improved his chances of winning.
Over two days he had won a total of approximately £7.7 million. The casino considered that what V had done amounted to cheating and declined to pay him his winnings. V contended that he had not cheated, but had deployed a perfectly legitimate advantage.
The gambler believed edge-sorting was an honest technique. He sued for his winnings. The judge held that although the gambler was genuinely convinced that what he had done was not cheating, he had in fact and in law cheated, thus breaching the implied term against cheating in his contract with the casino.
The gambler argued that the test of what was cheating was the same for the implied term as for the criminal offence of cheating at gambling in section 42 of the Gambling Act 2005 and that cheating necessarily involved dishonesty, which had not been demonstrated in his particular case.
The High Court held that V's use of edge-sorting amounted to cheating. The Court of Appeal, (Civil Division), upheld that finding. Ivey then appealed to the UK Supreme Court.
The appeal was dismissed, and it was held that the subjective element of the test for dishonesty in R v Ghosh did not correctly represent the law and so directions based on it should no longer be given.
Furthermore, the Supreme Court added that the principal objection to the second leg of the rule in R v Ghosh, was that the less the defendant's standards conformed to what society in general expected, then the less likely s/he was to be held criminally responsible for their behaviour.
New Dishonesty test
If dishonesty was in question, then the fact-finding tribunal had first to ascertain the actual state of the individual's knowledge or belief as to the facts. The question whether the conduct was honest or dishonest was then to be determined by applying the objective standards of ordinary decent people.
R v Barton and another 2020 – expressly overruling Ghosh
Following on from Ivey, in R v Barton and another 2020, the Court of Appeal stated that they were bound by the precedent of the Supreme Court, including content in obiter dicta, and as such, the test for dishonesty in all criminal cases is that established in the Ivey case. As such, Ghosh was expressly overruled.
Barton dishonestly targeted, befriended and groomed wealthy and childless elderly people in his care home for a period of over 20 years, taking advantage of their vulnerability towards the end of their lives, and defrauding them out of more than £4 million. Manipulating them and isolating them from their family, friends and professional advisers, he was then able to persuade them to pay him excessive amounts to cover care fees and to make him a beneficiary in their wills to dishonestly profit from them.
At trial, the judge directed the jury on the issue of dishonesty by reference to the judgment in Ivey v Genting Casinos (UK) Ltd 2017, indicating that he had followed the Supreme Court's instruction that directions based on Ghosh should no longer be given. The alternative test proposed by the Supreme Court in Ivey was, first, to determine the defendant's actual state of knowledge or belief as to the facts and, second, to ask whether their conduct was dishonest by the standards of ordinary decent people.
Barton appealed against his conviction, stating that Ghosh remained the binding authority because the Supreme Court's observations in Ivey were obiter dicta and that, even applying the Ivey test, the convictions were unsafe because the judge had failed to direct the jury to ascertain his actual state of mind before considering the second part of the test. The prosecution submitted that Ivey expressly overruled Ghosh and bound the instant court as to the meaning of dishonesty in the criminal context.
The Court of Appeal (Criminal Division) dismissed the appeal against conviction, stating that the ordinary rules of precedent required the court to follow Supreme Court decisions. The undoubted reality was that, in Ivey, the Supreme Court had altered the established common law approach to precedent in the criminal courts, by stating that the test for dishonesty it had identified, albeit strictly contained in obiter dicta, should be followed in preference to an otherwise binding authority of the Court of Appeal.
This ground-breaking judgment, pursued by the CPS Specialist Fraud Division at the Court of Appeal, has now clarified that the legal test for dishonesty in criminal law is that now given in Ivey.
The Court of Appeal refused permission for the case to be heard at the Supreme Court, which means that the redefined test will stand for many years to come.
It is somewhat surprising that the Ghosh dishonesty test prevailed for over 35 years, when you consider that the Supreme Court in Ivey held that the subjective element of the test for dishonesty in R v Ghosh did not correctly represent the law for all those years!