Supreme Court abolishes Ghosh test for dishonesty

Supreme Court abolishes Ghosh test for dishonesty

CategoryNews Author Richard Spearman KC Date

Richard Spearman QC acted for poker star Phil Ivey, who lost his appeal to the Supreme Court against the rejection by Mitting J and the Court of Appeal of his claim for winnings of just over £7.7m derived from playing Baccarat at Crockfords Club on 20 and 21 August 2012.

Mr Ivey used a technique known as “edge-sorting”. He contended that this is a legitimate gambling technique, whereas Crockfords contended that it amounts to cheating, and thus a breach of the implied term in the gaming contract (admitted by Mr Ivey) that neither side would cheat.

Although Mitting J made no finding of dishonesty against Mr Ivey, applying what he described as “the civil concept of cheating” he held that Mr Ivey had cheated and dismissed his claim. As part of its case, Crockfords relied on s42 of the Gambling Act 2005, which created a criminal offence of cheating at gambling, but Mitting J considered that the requirements of s42 are not clear, and that it was unnecessary for him to consider it.

The Court of Appeal (Arden and Tomlinson LJJ, Sharp LJ dissenting) upheld that decision and dismissed Mr Ivey’s appeal, but for reasons which differed both from those given by Mitting J and from one another. Both Arden LJ and Sharp LJ analysed the meaning of the word cheating by reference to s42 and arrived at conclusions as to the meaning of cheating within s42 which, as they held, applied equally to the implied term of the contract between Mr Ivey and Crockfords. However, Arden LJ held that for purposes of s42 an allegation of cheating does not require dishonesty, whereas Sharp LJ held that it does, and would have allowed the appeal on the basis that (as accepted by all three members of the Court of Appeal) Mitting J had acquitted Mr Ivey of dishonesty. Both Arden LJ and Sharp LJ agreed that if dishonesty is a necessary element of the offence under s42, the relevant test is that established in R v Ghosh [1982] QB 1053. Tomlinson LJ followed Mitting J in reasoning that the case could be decided without reference to s42, and expressed no view on the mental element of the offence, but held that Mr Ivey had cheated because he had practised deception.

The judgment of the Supreme Court was given by Lord Hughes, with whom all the other Justices agreed. Lord Hughes accepted Mr Ivey’s argument that the test of what is cheating must be the same for the implied term as for s42, but rejected his case that dishonesty is an essential requirement of cheating in the context of games and gambling, and held that Mitting J’s finding that he had cheated by using the technique of edge-sorting was “unassailable”.

In these circumstances, the need to consider the parameters of the concept of dishonesty did not strictly arise. Nevertheless, Lord Hughes went on to hold that “there can be no logical or principled basis for the meaning of dishonesty (as distinct from the standards of proof by which it must be established) to differ according to whether it arises in a civil action or a criminal prosecution” [63] that there are “convincing grounds for holding that the second leg of the test propounded in Ghosh does not correctly represent the law and that directions based upon it ought no longer to be given” [74] and that for purposes of both civil and criminal law the test of dishonesty is the same: “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.” [74]

To view the full judgment, please click here.

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