On 29 April 2020, the Court of Appeal, in R v Barton & Booth [2020] EWCA Crim 575 provided an important decision on the test for dishonesty in a criminal context. For solicitors facing an SRA investigation or SDT hearing for dishonesty allegations, this case provides that the test set out in Ivey v Genting Casinos (UK) t/a Crockfords [2017] UKSC 67; is preferred to the test in R v Ghosh [1982] QB 1053.
The facts
The Appellant, A, was appealing against his convictions of conspiracy to defraud, and against sentences totalling 21 years’ imprisonment. He had operated a nursing home and for over 20 years had targeted and manipulated elderly residents in order to profit from them.
Several of the residents had left him the residuary of their Will and/or handed him control of their financial affairs. A also benefited from large gifts made by vulnerable residents (although it was found they had capacity). In total, A had made over £4 million from his activities.
A argued that the benefits he had gained from the residents of his nursing home had been made freely by the Testators and furthermore, all the Testators had obtained legal advice.
At first instance, the judge directed the jury to apply the test in Ivey rather than Ghosh when considering whether A had acted dishonestly. In doing so, he did what the Supreme Court had indicated should happen at [74] of Ivey, namely that directions based upon Ghosh “ought no longer to be given”.
The Appellants submitted that Ghosh remained binding authority because the Supreme Court’s observations in Ivey were obiter dicta only.
The two tests
The test for dishonesty in Ghosh is as follows:
a) Was the Defendant’s conduct dishonest by the ordinary standards of reasonable people?
b) If the answer to a) is yes, did the Defendant appreciate that their conduct was dishonest by those standards?
Ghosh remained the standard test for dishonesty for many years; however, it was criticised by many academics. In 2017, the Supreme Court rejected it. Lord Hughes (with whom the other members of the court agreed), stated:
“These several considerations provide 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. The test of dishonesty is as set out by Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan and by Lord Hoffmann in Barlow. 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]
A new test was created, namely
a) what was the Defendant’s actual state of knowledge or belief as to the facts?; and
b) was their conduct dishonest by the standards of ordinary decent people?
Ghosh v Ivey – who is the winner?
Lord Chief Justice set out the Court’s conclusions at paragraph 104. They are as follows:
“We conclude that where the Supreme Court itself directs that an otherwise binding decision of the Court of Appeal should no longer be followed and proposes an alternative test that it says must be adopted, the Court of Appeal is bound to follow what amounts to a direction from the Supreme Court even though it is strictly obiter. To that limited extent the ordinary rules of precedent (or stare decisis) have been modified. We emphasise that this limited modification is confined to cases in which all the judges in the appeal in question in the Supreme Court agree that to be the effect of the decision. Such was a necessary condition before adjusting the rules of precedent accepted by this court in James in relation to the Privy Council. Had the minority of the Privy Council in Holley not agreed that the effect of the judgment was to state definitively the law in England, it would not have been accepted as such by this court. The same approach is necessary here because it forms the foundation for the conclusion that the result is considered by the Supreme Court to be definitive, with the consequence that a further appeal would be a foregone conclusion, and binding on lower courts”.
This statement leaves no room for further debate. The Ghosh test for dishonesty is out. Going forward, the test laid down in Ivey must be applied.
Advice on how this would occur in practice was helpfully set out at paragraph 108:
“This approach, which was the approach of the Supreme Court in Ivey, makes clear that when Lord Hughes talked in [74] of the “actual state of mind as to knowledge or belief as to the facts” [our emphasis] he was referring to all the circumstances known to the accused and not limiting consideration to past facts. All matters that lead an accused to act as he or she did will form part of the subjective mental state, thereby forming a part of the fact-finding exercise before applying the objective standard. That will include consideration, where relevant, of the experience and intelligence of an accused. In an example much used in debate on this issue, the visitor to London who fails to pay for a bus journey believing it to be free (as it is, for example, in Luxembourg) would be no more dishonest that the diner or shopper who genuinely forgets to pay before leaving a restaurant or shop. The Magistrates or jury in such cases would first establish the facts and then apply an objective standard of dishonesty to those facts, with those facts being judged by reference to the usual burden and standard of proof”.
What this means in cases involving solicitor dishonesty?
Much of the criticism surrounding the test in Ghosh was that it was too subjective. It allowed for a broad scope of dishonesty decisions because what mattered was whether the Defendant believed their conduct was dishonest by the standard of ordinary people. And we know that this varies widely. Think of Al Capone’s famous lament – “I have spent the best years of my life giving people the lighter pleasures, helping them have a good time, and all I get is abuse, the existence of a hunted man.” Despite his crimes, the gangster believed he was doing a public good.
The test in Ivey is objective. It considers the Defendant’s knowledge or belief as to the facts of the situation, then judges their conduct in relation to that knowledge or belief on the standards of ordinary, decent people.
Is the Ivey test perfect? Far from it – how do we establish a definition of an “ordinary, decent person” for example. However, due to its objectivity, Ivey will give more consistent results in cases where establishing dishonesty is a factor. This, in turn, will provide a solid foundation in which to build a persuasive defence.
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