“……. The more warped the defendant’s standards of honesty are, the less likely it is that he will be convicted of dishonest behaviour”: Ivey v Genting
“The more warped the defendant’s standards of honesty are, the less likely it is that he will be convicted of dishonest behaviour……..” This, according to the Supreme Court in yesterday’s judgment in Ivey v Genting Casinos  UKSC 67, is the problem with the Ghosh test for dishonesty.
The Ghosh test is derived from criminal proceedings ( QB 1052). It is two-fold as follows:
- First, the fact finding tribunal must ask whether the conduct complained of was dishonest by the objective standards of ordinary reasonable and honest people. If the answer to that question is no, then the defendant is not dishonest.
- However, if the answer to the first question is yes, the fact finding tribunal must then ask whether the defendant must have realised that ordinary honest people would regard his behaviour as dishonest (with the effect that it is only if he was convicted only if the answer to that second question is also yes).
The potential for mismatch between the Ghosh test applied in criminal proceedings and the different test applied in breach of trust proceedings has been troubling tribunals and courts in disciplinary cases in recent years (see e.g. Malins v SRA  EWHC 835).
The test usually applied in civil claims for breach of trust is derived from Barlow Clowes v Eurotrust  1 All ER 333 where the Court of Appeal identified that the key issue was whether the defendant knew the elements of a transaction which made his participation transgress ordinary standards of honest behaviour, rather than requiring him to have thought about what those standards were.
In today’s decision in Ivey, the Supreme Court has stated that it is unsatisfactory that different tests apply for dishonesty in different contexts. Indeed, it described it as “an affront to the law if its meaning differed according to the kind of proceedings in which it arose.”
The Supreme Court also suggested that the unintended consequence of the second leg of the Ghosh approach is that the more “warped” the defendant the better his chance of avoiding a finding of dishonesty.
According to the Supreme Court the correct test for dishonesty is as follows:
“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.”
Although the Supreme Court depicted “dishonesty” as a “simple, if occasionally imprecise, English word”, how to recognise it (and how to differentiate it from lack of integrity) is likely to continue to trouble the courts.
25 October 2017
Disclaimer: this article is not to be relied on as legal advice. The circumstances of each case differ and legal advice specific to the individual case should always be sought.