Facts
Phil Ivey, a well-known professional gambler, played Punto Banco at Crockfords casino in Mayfair in 2012. With an associate, he used a technique called edge-sorting. Some playing cards are printed with tiny asymmetries on their backs. By persuading the croupier to rotate certain cards, supposedly for superstitious reasons, Ivey could later identify high-value cards before they were turned over.
He won about £7.7 million. The casino refused to pay, saying he had cheated. Ivey sued for his winnings. He said he hadn't cheated, because he hadn't been dishonest: he genuinely believed edge-sorting was legitimate gamesmanship.
Issues
- Was edge-sorting cheating, so that Ivey breached an implied term of his contract with the casino?
- Does cheating require dishonesty?
- What is the correct test for dishonesty?
Decision
The Supreme Court unanimously dismissed Ivey's appeal. Lord Hughes gave the leading judgment. Edge-sorting was cheating, and cheating doesn't require dishonesty. The casino didn't have to pay.
Reasoning
Cheating. Ivey had deliberately arranged for the croupier to rotate the cards, without her knowing why, so that he could gain an advantage. That interfered with the game and was cheating, whatever he believed about it.
Dishonesty. Although it wasn't strictly necessary for the decision, the Supreme Court also addressed the test for dishonesty in criminal law. Under R v Ghosh [1982] QB 1053, the jury asked:
- whether the conduct was dishonest by the ordinary standards of reasonable and honest people; and, if so,
- whether the defendant realised that reasonable and honest people would regard it as dishonest.
Lord Hughes said the second limb was a serious flaw. It meant that the more warped a defendant's moral standards, the less likely they were to be convicted. It also didn't match the test for dishonesty in civil law.
The new test. The fact-finder should:
- first ascertain, subjectively, the actual state of the individual's knowledge or belief as to the facts. The reasonableness of a belief is evidence of whether it was genuinely held, but the question is whether it was genuine; then
- decide whether the conduct was dishonest by the objective standards of ordinary decent people.
There's no further requirement that the defendant recognised the conduct as dishonest by those standards.
Why it matters
Ivey simplified the law of dishonesty and aligned the criminal and civil tests. Its comments on criminal law were obiter, because it was a civil case. In R v Barton and Booth [2020] EWCA Crim 575, a five-judge Court of Appeal confirmed that the Ivey test now governs criminal cases, and Ghosh is no longer good law.
How it comes up in exams
For theft and fraud offences, deal with dishonesty in two steps:
- Start with the Theft Act 1968, s 2. A defendant isn't dishonest if they believed they had a legal right to the property, believed the owner would consent, or believed the owner couldn't be found by taking reasonable steps.
- If s 2 doesn't apply, use Ivey: establish what D actually knew or believed, then ask whether the conduct was dishonest by the standards of ordinary decent people.
Don't apply the old second limb of Ghosh. On SQE1, an option that asks whether D realised others would think the conduct dishonest is a classic trap.
Frequently asked questions
What is the Ivey test for dishonesty?
First, the fact-finder must ascertain, subjectively, the actual state of the individual's knowledge or belief as to the facts. Then, it must decide whether their conduct was dishonest by the objective standards of ordinary decent people. The defendant doesn't need to realise that their conduct was dishonest by those standards.
What was wrong with the Ghosh test?
Its second limb asked whether the defendant realised ordinary decent people would regard their conduct as dishonest. That meant the more warped a defendant's standards, the less likely they were to be convicted.
Did Ivey cheat?
Yes. The Supreme Court held that edge-sorting, where he got the croupier to rotate the cards so he could identify them, was cheating, so the casino didn't have to pay his winnings. Cheating didn't require dishonesty.
Is the Ivey test binding in criminal cases?
Ivey was a civil case and its comments on criminal law were obiter. But in R v Barton and Booth [2020] EWCA Crim 575, the Court of Appeal confirmed that the Ivey test is the test for dishonesty in criminal law.