Supreme Court overhauls dishonesty test
The Supreme Court has today overhauled the criminal test for dishonesty, known as the Ghosh test, which has stood since 1982.
By essentially removing the final limb of the test, which asked whether the defendant realised that his or her actions were dishonest by the standards of ordinary people, the court has made proof of dishonesty much easier for prosecutors to achieve.
This will come as welcome news to local authorities prosecuting dishonesty offences, including benefit fraud and unlawful subletting, as the mental element in such cases will be significantly easier to prove.
The case itself, Ivey v Genting Casinos t/a Crockfords [2017] UKSC 67, concerned a dispute between a gambler and a casino. The gambler sued the casino for failing to pay out his winnings of £7.7mn in just two days; the casino accused the gambler of cheating. The High Court, Court of Appeal, and Supreme Court all agreed that the gambler had cheated, by using edge sorting to gain an advantage in a card game called Punto Banco (a variant of Baccarat). The court considered a disparity in the definition of dishonesty as between the civil and criminal courts, the former preferring an objective test not qualified by the subjective element in the latter, as formulated by the Court of Appeal in R v Ghosh [1982] EWCA Crim 2.
The Ghosh test had two stages: first, is the conduct dishonest by the standards of ordinary people; second, must the Defendant have realised that his or her behaviour fell below that objective standard? Only if the answer to both question is ‘yes’ could dishonesty be found. The Supreme Court considered that this “compromise” rule had “a number of serious problems” ([56]-[57]), and removed that second stage of the test, reformulating it in line with the test in civil proceedings, as follows (at [74]):
“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.”
The court observed that, under the previous Ghosh test, “the less the defendant’s standards conform to what society in general expects, the less likely he is to be held criminally responsible for his behaviour” ([58]). In a subletting context, this means that a Defendant who parts with possession of a social home for profit, but who genuinely believes that to do so is not dishonest, would be entitled to be acquitted – at least of the dishonest version of the offence under the Prevention of Social Housing Fraud Act 2013. Now, the fact that a profit was made is much more likely to be determinative in practice of the question of criminal liability for the dishonesty offence.
Local authorities are therefore encouraged to press ahead with prosecutions for dishonesty offences where justified by the evidence and in the public interest, with less concern that their efforts may be defeated by a Defendant demonstrating what the Supreme Court called ‘warped standards of honesty’ ([57]).
To view a copy of the judgment please click here.
Richard Hanstock is a specialist in local authority regulatory crime, with police experience in fraud investigation and is a member of the Serious Fraud Office panel of counsel.
