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Major criminal syllabus shake-up as Ghosh test is overruled

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Time to amend your notes

Get your Tipp-Ex out law students, the second limb of the Ghosh test has been overruled.

This is because the Supreme Court has now made its ruling in Ivey v Genting Casinos, which asked it to consider the second, subjective element to the R v Ghosh legal principle.

This limb means that to prove dishonesty in, for example, theft and fraud cases the accused must have realised that what they were doing was, by the standards of a reasonable person, dishonest. This element protects people who commit objectively dishonest behaviour but don’t realise they are doing so, like an unwitting tourist jumping on a London bus (the Clapham omnibus, perhaps) without paying.

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This test has been a law student staple since its creation in the 1980s, and tends to be used in professional disciplinary hearings too. Now, it’s time for textbooks and lecture notes to be rewritten as the Supreme Court has decided, unanimously, that:

“[T]he 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… When once [the accused’s] 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.”

These are the words of Lord Hughes, with whom his four colleagues sitting on the bench also agreed. A big, overruling case like that being heard by a bench of just five judges may irk some (remember the Gina Miler Article 50 case was heard by all 11 judges).

Too few judges or not, the ruling will have a big impact. Legal Cheek asked Findlay Stark, a criminal law lecturer at the University of Cambridge, whether this case will impact law school syllabuses. He replied:

“Yes. Students will have to be aware of the disapproval of the second limb of the Ghosh test by the Supreme Court in Ivey and consider: how Lord Hughes’ test actually differs from the two-limbed approach in Ghosh [and more]… I imagine it’s game over for Ghosh.”

The appeal in question was brought by top poker player Phil Ivey, who had won £7.7 million in a Mayfair casino in 2012. Genting Casinos, the respondent in this case, said Ivey was not entitled to the multi-million pound pay-out because he had used a technique called “edge-sorting”, which they considered to be cheating. Ivey, represented by 39 Essex Chambers’ Richard Spearman QC and Wilberforce Chambers’ Max Mallin QC, argued he did not consider edge-sorting to be cheating and, therefore, the subjective limb of Ghosh could not be made out.

In the words of Iain Miller, from the respondent law firm Kingsley Napley: “It is now clear that the Ghosh test is no longer good law… There are relatively few cases that so dramatically change the predominant approach in a given area but this is one of them.” Expect a textbook re-write to follow.

Read the judgment in full here:

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38 Comments

Just Anonymous

This whole case is a textbook example of when not to bring a case before the Supreme Court.

Morally, Ivey’s case was absurd. If correct, he was entitled to payment if he genuinely considered his conduct appropriate (as he did) but anyone who committed identical conduct believing otherwise was not.

I’m sorry, but that’s stupid. I don’t care if it were the law. If it were, then the law was stupid and needed to change.

And when you’re bringing such a case before a court not bound by previous case law, there is a strong risk the court will reason precisely the same way.

Which is exactly what the Supreme Court did.

(16)(0)

No guilty mind, no crime.

The criminal law shouldn’t have to sell itself out to prevent the undesirable consequence of D’s keeping the £7.7m for lack of remedy elsewhere.

Your behaviour isn’t criminal if you do something you think is honest. That doesn’t mean you shouldn’t be made to pay back what you have acquired by doing something dishonest.

(2)(1)

Lord Denning (Dec’d)

Golly ghosh!

I wasn’t expecting that!

(2)(0)

Anonymous

So are we going to see R v G&R recklessness overturned, on the same principle?

(1)(0)

Tired lawyer

What about card counting?? Perhaps objectively dishonest (thought that’s contestable if you don’t use technology just your brain) but counting cards shouldn’t become a fraudulent action…..

(5)(0)

Anonymous

There’s nothing objectively dishonest about counting cards.

Ivey was objectively (and realistically, subjectively) dishonest in that he asked the croupier to rotate certain cards by 180 degrees because (he said) he was superstitious, whereas the actual reason he asked them to do that was to gain an unfair advantage because the backs of the cards were asymmetrical. In other words, he was lying.

I don’t think even a lie is necessarily dishonest if the rules of the game in question permit it. It would be an odd result if a poker player was cheating when an opponent asked if the player held two Aces and the player responded, untruthfully, ‘No’. That just seems to be part of the game, to me.

(6)(0)

Anonymous

If Ivey was using his brain/skill to formulate a pattern then it would be hard to prove dishonesty because the objective element would be missing. However, in this instance, it was clear he knew the cards were asymmetry and gained an unfair advantage as a result.

It is very sad that the CA could not see the rational. There was no reason to overule Ghosh. He was indeed dishonest, end of story. ‘Truthfulness is indeed one characteristic of honesty, and untruthfulness is often a powerful indicator of dishonesty, but a dishonest person may sometimes be truthful about his dishonest opinions..’ for me this is to boldly go where no man has gone before.

(0)(0)

Anonymous

The decision has not been overruled. It has been disapproved and there is a difference.

(1)(9)

Just Anonymous

I don’t think that’s right. Look at paragraph 74. The court couldn’t be clearer. Ghosh – specifically the second limb of Ghosh – is wrong and must no longer be followed.

(16)(0)

Anonymous

Yes, but if it wasn’t part of the ratio of the case then it’s not binding.

(2)(2)

Anonymous

I believe it was part of the ratio.

The claim here was for breach of contract. The parties and court agreed that there was an implied term that neither party would cheat.

Cheating was defined as the offence contained by s.42 of the Gambling Act 05.

In order to determine whether the offence has been committed the courts have required the element of dishonesty to be satisfied (even though dishonest is not mentioned in the statute).

Therefore, the test for establishing dishonesty is part of the ratio because it is the fundamental rule of law on which the outcome of the case depends.

**I may well be wrong. I hated this ratio/obiter shit on the GDL.

(4)(0)

Anonymous

Yes, establishing dishonesty was part of the ratio – but not (necessarily) to the level of criminal mens rea – so I would regard the Ghosh comments as obiter.

(0)(1)

Anonymous

They had to establish whether the criminal offence had been committed. Surely that would require establishing dishonesty to the criminal standard?

(1)(0)

Anonymous

No, because it was found that dishonesty was not a necessary part of the offence in question.

(0)(1)

Anonymous

Utter bollocks, that. Is it binding? Is it overruled? Utter bollocks in real life. In my field, every court has been following Privy Council decisions, as interpreted by the Court of Appeal, in preference to Lord Hutton’s utterly insane decision on dishonesty in Twinsectra v Yardley for years now. Despite Twinsectra being binding. Lord Millet’s dissent in that case has been treated as the law, even though he was in a 4:1 minority.

Luckily this new SC case restores some sanity after years of having to fudge it.

(1)(1)

Anonymous

This new case fudges it more. This case defines dishonesty with reference to Barlow Clowes. The problem with Barlow Clowes is it defines dishonesty with reference to Twinsectra. It just pretends that Twinsectra said what Royal Brunei said when in reality Twinsectra said what Ghosh said.

(0)(0)

Anonymous

An obiter statement by a Court such as this is obviously highly persuasive. However, it does not overule binding authority.

(1)(5)

Findlay Stark

Here’s the quote without ellipses:

Students will have to be aware of the disapproval of the second limb of the Ghosh by the Supreme Court in Ivey and consider: how Lord Hughes’ test actually differs from the two-limbed approach in Ghosh (has at least some of the second limb been collapsed into the first, for example?); whether the Ivey test is an improvement (what criteria do we apply when answering that question?); and what a trial court ought to do (Lord Hughes made what appears to be a detailed obiter comment in a civil case, and Ghosh is a decision of the Criminal Division – which binds the Magistrates’ Court and Crown Court?).

In practice, I imagine it’s game over for Ghosh. It would be ideal for any uncertainty in that regard (if it arises) to be resolved quickly by the Court of Appeal, and – if necessary because of the in theory restrictive rules on departing from previous Court of Appeal decisions – the Supreme Court.

(4)(1)

Anonymous

LC should have included the full quote from you.

How do you think Magistrates and judges will respond to the judgment in the meantime? Will they be willing to depart from Ghosh?

Perhaps this is a question for a junior criminal barrister…

(3)(0)

Findlay Stark

I should also check I’ve not left any typos in…!

You’re right: one for those on the front line.

(1)(0)

Holly Knowles

Ghosh analysis was obiter as it did not form part of the reasoning for the eventual judgement. That’s not to say that a future case wouldn’t implement a solely objective test for dishonesty, but the law as it stands is unchanged.

(0)(8)

Just Anonymous

That can’t be right. It was part of the reasoning: it was merely an alternative reason.

Ivey’s case involved two necessary and independent propositions: that cheating involves dishonesty, and Ivey was not dishonest. The Supreme Court rejected both. The Ghosh analysis related to the latter. I fail to see how each separate point isn’t binding.

(9)(0)

Anonymous

Oh dear.

(0)(5)

Just Anonymous

That’s not an argument.

But I can make the point even clearer with an example.

A tort case goes on appeal to the Supreme Court. Breach of duty and causation are both in issue. The Supreme Court finds for the defendant on breach. Thus, the claimant inevitably loses, regardless of the court’s stance on causation.

If you/Holly’s analysis is correct, then anything the court says on causation is obiter. However, that is plainly absurd – it’s a separate and distinct issue. If the court gives a full reasoned analysis on the causation issue, then that is also binding.

It gets worse: imagine that the Supreme Court finds for the defendant on causation as well. That also determines the matter irrespective of breach. Does this mean that the breach analysis is now also obiter?

Exactly the same thing is going on here. The Supreme Court found against Ivey on one issue. It then found against him on another (separate) issue.

(8)(0)

Anonymous

No case has ever turned with finality on the question whether something from somewhere is binding, obiter or persuasive, without it going on elsewhere and getting sorted out. This is the sort of cobblers that academics enjoy, and encourage their students to enjoy, and that a few practitioners (those who have never argued a case on their hind quarters) indulge in. Otherwise, it’s an occult parlour game.

(2)(0)

Anonymous

Because Ghosh was a case on establishing the mens rea (and AR, but less on point here) required to prove the dishonesty element of a criminal offence – in a case on the interpretation, essentially, of a contract, though dishonesty may be the subject matter it is not necessarily the case that this requires all the elements of an tangentially related criminal offence to be made out.

(0)(0)

Anonymous

The most ridiculous SC decision in ages. Casino’s cheat people on a daily basis, I could list various examples, but it would take too long; and they get away with it. He was simply using the skill (which arguably nobody else in the industry could use).

(0)(0)

Anonymous

On a scale of Mao to Lenin, how Jeremy Corbyn are you?

(3)(1)

You've got to know when to hold em, know when to fold em

What kind of an edge does “edge-sorting”, if executed correctly, give the player over the casino, if any (for example, did it turn a game with is 52/48 in the casino’s favour into a game 54/46 in the player’s favour?)? Did Phil Ivey know that it gave him an edge over the casino?

I think if edge-sorting results in a game that is still in the casino’s favour then Ivey is certainly right to consider it a legitimate tactic. If it swings it in the player’s favour then I would say it is dishonest if the player knows that is the case. Casinos will not run a game in which the odds are stacked against them and if you know you are playing a game in a casino in which the odds are stacked in your favour (for a game in which you are playing against the casino and not other players), you can assume it is because you are not playing fair.

(4)(0)

Anonymous

This is certainly the way I would approach it. Unfortunately most people don’t really understand gambling and casinos.

(0)(0)

Anonymous

Everything you want to know is in the judgment. It said that if played with perfect accuracy, the edge sorting Mr Ivey employed would give a long term advantage over the house of 6.5%. Although he was dishonest, there was still enormous skill in what he did.

(0)(0)

Anonymous

Fair, if I ever have the time I will probably read it in full.

I guess that 6.5% advantage is the advantage of Mr Ivey given his level of skill, as opposed to the advantage that would have been gained by the average casino-goer adopting the same strategy but without the equivalent level of skill to achieve a 6.5% advantage. I would argue that if the person of average skill would not gain a % advantage over the house then Mr Ivey has an argument it was reasonable that he was not dishonest on the basis that he was winning money due to skill rather than due to being dishonest.

(0)(0)

Anonymous

The casinos are only mad because they got the wool pulled over their eyes in a perfectly legitimate matter. Casinos always look for a reason not to pay out when they get played at their own game whereas they have no qualms about cheating everyone

(4)(0)

Anonymous

Paragraphs 18 to 25 of the judgment…

Ivey plays punto banco. This is a card game where he plays against the casino 1 on 1.

Cards 7 8 and 9 are high value. They increase the chance of the holder winning substantially.

Casino cards are supposed to be unmarkable due to either being blank on the back or having a perfectly symmetrical pattern.

This casino uses cards which have a split hair of a difference on the supposedly perfect pattern. Ivey has the eye to spot this discrepancy when cards are dealt out of a shoe.

Ivey ‘s friend is cantonese, as is the croupier. When Ivey or the casino are dealt a 7 8 9 she asks the croupier to rotate the cards before She puts the cards back in the deck, or shoe. The friend is not outwardly so blatant and to 3xplain why she makes this request, she says it is for luck.

Ivey is dealt a whole deck over a period of time and his friend has the 789 cards turned each relevant time.

He claims he is 40k up at the end of the deck and, as it is lucky, he says, he asks the croupier for the same deck again, instead of a new one.

Ta da. This time, with his eagle eyes, he can tell who has been dealt a 789 before the cards are turned over onto their face.

Guess what ? He doesn’t stop betting till he wins 2 million.

I assume he repeats his modus the following day to get to 7.7 million.

Guess what again ? The casino audits cctv of its games where it loses big bucks and it comes across the footage of the turn the cards request in the 40k deck, and it realises it has been stitched up and refuses to pay out….

Now I would love to see the written opinions of the solicitors and the qcs acting for Ivey as to what they thought of his chances of getting his 7.7 million on those facts were !

I have seen Ivey on tv. He is a casual guy, rather than a suited and booted player. Dob 1977. On seeing the respondents cctv and their account of his friends actions on the 40k deck, I would have said ” no chance Phil san. Send the next client in on your way out…”

So i wonder how my fellow brethren get to run such a case to the top of the appeal courts !

(4)(0)

Anonymous

I love edging.

Sometimes I refrain from touching for weeks until my b/f comes round and he can edge me for 30 mins until completion.

Mmmmmmmmm.

(2)(2)

HHJ Dr The Rt Hon Lord Harley QC LLB KGB BDSM ABDL GCSE (Hons)

This decision is not binding on the Privy Arbital Court

(1)(0)

Anonymous

A wrong decision.

Parliament will do something I presume

(0)(2)

Anonymous

“Parliament will do something I presume”

Yeah, cos the ‘gambler with lower standards of honesty than the general public’ vote is a key swing demographic.

(0)(0)

Comments are closed.

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