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QC Corner - Andrew Ayres QC

Question: when is something “dishonest”? Answer: when I say it is!

The UK’s Supreme Court has sought to harmonise the law of dishonesty, by joining up the criminal test for dishonesty with the existing civil test.

The case in question, Ivey v Genting [2017] UKSC 67, decided on 25th October 2017, did not concern dishonesty in the contexts where it might normally arise, e.g. the criminal law, dishonest assistance in breach of trust or a fraud claim, but in the context of a conceded contractual implied term in a gaming contract that the gambler would not “cheat” at the card game of Punto Banco. All the way along, at trial, in the Court of Appeal and in the UK’s highest court, the gambler lost.

In the criminal context, the law was found principally in the case of R v Ghosh [1982] QB 1053, which required proof that, subjectively, the defendant herself must have realised that what she was doing was, by the standards of reasonable and honest people, dishonest. Subject to issues of personal credibility, and in theory at least, this allowed some defendants to self-regulate the trigger for liability for dishonesty offences.

The UK Supreme Court now brings all forms of dishonesty into line with the civil standards well known to those practicing in the trusts and corporate contexts. Now, if, by ordinary standards, a defendant’s mental state would be characterised as dishonest, it is irrelevant that the defendant herself judges dishonesty by different standards. Lord Hughes said at paragraph 74 of Ivey:

“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.”

Unfortunately, this is not likely to be the end of the story, not because this important part of the decision was strictly obiter dicta but because a dishonest state of mind is something inherently subjective to any individual and there will be cases where, no matter how apparently objectionable the defendant’s conduct, the enquiry as to the actual state of the individual’s knowledge or belief provides inadequate or insufficient material to undertake with any ease the second-stage objective assessment of someone’s conduct. There are always cases where giving good advice as to whether impugned conduct was or was not dishonest requires careful analysis and judgment, and Ivey will not reduce the number of those.

Source: http://harneysoffshorelitigation.com/andrewayresqc/

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