Test for dishonesty under English law confirmed – a tale of three cases

The Court of Appeal has recently confirmed the test for dishonesty under English law, resolving a period of uncertainty following a Supreme Court decision in 2017.

Booth & Anor v R [2020] confirmed Supreme Court comments in Ivey v Genting Casinos (UK) [2017]  that the new test for dishonesty, as set out in Ivey, is:

• what was the defendant's actual state of knowledge or belief as to the facts; and
• was his conduct dishonest by the standards of ordinary decent people?

This replaces the prior test for dishonesty, established by R v Ghosh [1982]. In addition to requiring that the defendant’s conduct must be dishonest by the standards of ordinary decent people, the Ghosh test also required the defendant to have subjectively realised that ordinary honest people would regard their behaviour as being dishonest.

Dishonesty in context

The Ghosh test for dishonesty has widely been acknowledged as problematic, notwithstanding that it was binding precedent. In particular, jurors found the Ghosh test difficult to apply in practice and its application could also lead to perverse outcomes, where individuals who did not comprehend ordinary and socially accepted standards of dishonesty could be judged not dishonest according their own (frequently lower) standard.

In paragraph 57 of his judgment in Ivey, Lord Hughes enunciated the issues with the Ghosh test in detail before forensically discussing the associated case law. Lord Hughes’ conclusion on the point, with which the other Supreme Court justices unanimously agreed, was that there were “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.”

However, while Ivey was widely recognised as a welcome development and as practically establishing an updated test for dishonesty, those comments were technically obiter dicta (the case was decided on a different point) and therefore, strictly speaking, did not establish a binding precedent. 

The Ivey decision therefore gave rise to confusion regarding what was now the correct test for dishonesty, a point that can often be determinative in criminal trials. 

The ruling in Booth

The appellants in Booth, David Booth and Rosemary Barton, operated and managed a luxury nursing home. Both were accused of using their position to defraud elderly residents and their estates over the course of 20 years in order to enrich themselves. Following an extensive fraud trial that lasted from May 2017 to May 2018, the appellants were convicted of multiple counts of conspiracy to defraud, theft and other fraud offences.

When directing the jury at first instance, the trial judge directed that dishonesty must be determined by applying the standards of ordinary decent people, i.e. following the approach directed in Ivey. On appeal, the appellants sought to argue that the trial judge should have directed the jury to apply the objective and subjective test set out in Ghosh, rather than the one set out in Ivey, and that as a result their convictions were unsound. 

The Court of Appeal decision

In paragraphs 101 to 104 of its judgment, the Court of Appeal in Booth acknowledged that the rules of precedent would ordinarily bind it to follow the Court of Appeal’s prior decision in Ghosh over what were strictly obiter dicta of the Supreme Court in Ivey. However, the Court of Appeal nevertheless dismissed the appeal against conviction on this point, ruling that where the Supreme Court had given a unanimous direction to no longer follow Ghosh and to proceed on the basis of a new alternative test, the Court of Appeal was bound to follow that direction.

The judgment acknowledged that this represented a “limited modification” of the ordinary rules of precedent and was careful to confine that modification to cases, such as Ivey, where all justices in the Supreme Court unanimously agreed that modification to be the effect of their decision. 

Comment

While the decision in Booth turned on a relatively technical and novel development of legal precedent the outcome is that, following the Court of Appeal’s decision to refuse the appellants’ application for permission to appeal on 17 June 2020, the Ivey test now stands as the definitive test for dishonesty. Given the Supreme Court’s frank directions in Ivey and the Court of Appeal’s fulsome explanation of its reasoning in Booth, it appears likely that the new test will stand for some time. 

A thought on conspiracy to defraud

The new simplified test for dishonesty is likely to be welcomed by prosecutors such as the Crown Prosecution Service (“CPS”) and Serious Fraud Office (“SFO”), for whom establishing dishonesty is often a key deciding factor, both for charging decisions and for success at trial. 

Additionally, while the judgment represents an important development in terms of dishonesty for both the criminal and civil spheres, the CPS and SFO are also likely to welcome the clear enunciation of the common law offence of conspiracy to defraud in paragraphs 117 to 126 of the Booth judgment.

Often referred to as the “prosecutor’s darling”, conspiracy to defraud is a versatile offence frequently employed by prosecutors in fraud cases where there is a consistent course of action between multiple conspirators but where the complexity and/or diffuse nature of the fraudulent conduct means it is difficult to evidence specific counts of other more focused fraud offences for all defendants. 

However, the common law offence’s wide scope and resulting versatility has also at times made it difficult for prosecutors successfully to get convictions at trial. This has resulted in acquittals and guidance from the Attorney General to prosecutors (here) that attempted to restrict the use of the offence in favour of similar but more focused statutory offences. 

The Court of Appeal’s judgment clearly sets out the criteria for the common law offence and their application and clarifies that there is no requirement for any unlawfulness or “aggravating feature” over and above a dishonest agreement which includes an element of unlawfulness in its object or means. An additional consequence of the decision in Booth may therefore ultimately be a wider application by criminal authorities of this most versatile of offences.