Ivey v Genting Casinos UK Ltd (t/a Crockfords Club)
Citations:  UKSC 67;  AC 391;  3 WLR 1212;  2 All ER 406;  1 Cr App R 12;  Lloyd’s Rep FC 561;  Crim LR 395.
The claimant was a professional gambler who used a technique called ‘edge-sorting’ to enhance his odds of winning at Punto Banco. He used this technique at the defendant’s casino, and won over £7 million. The defendant refused to pay out the winnings, on the grounds that the claimant had cheated (which was in breach of the contract between the parties). The defendant also argued that what the claimant had done was a criminal offence under section 42 of the Gambling Act 2005. This would make the winnings the proceeds of crime, and therefore irrecoverable in civil proceedings.
Whether the claimant had committed the section 42 offence depended on whether he had been ‘dishonest‘. The definition of ‘honesty’ in criminal law at the time was set by the test in R v Ghosh  EWCA Crim 2. This provided that a defendant was dishonest if 1) he would be considered dishonest by the standards of ordinary, honest people, and 2) he appreciated at the time that ordinary, honest people would consider him dishonest.
- Had the claimant cheated?
- Were the claimant’s actions ‘dishonest’?
The Supreme Court held in favour of the defendant. The claimant had cheated and therefore was in repudiatory breach of contract. His winnings were not recoverable.
This Case is Authority For…
Cheating bears the same meaning in criminal and civil law. It does not necessarily involve dishonesty, though it usually will. No exhaustive definition should be designed by the courts, but the essential element of cheating is a deliberate, non-accidental act designed to give an advantage which is objectively improper given the game/contest and rules. The defendant’s subjective assessment of his actions is not relevant to whether he was cheating.
Since the case could be dealt with on the basis that the claimant had cheated, there was no need to consider whether he was dishonest. However, the Supreme Court did so anyway. These remarks, while strictly obiter, have widely been accepted as overruling the Ghosh test.
The two-stage test set out in Ghosh should not be considered good law. Instead, the following test should be used to determine whether the defendant is honest:
- Determine the defendant’s subjective beliefs or knowledge about the facts;
- In light of that knowledge or belief, and any other relevant circumstances, determine whether the defendant’s behaviour is dishonest by the standards of ordinary, honest people.
The defendant’s own beliefs about the honesty of his conduct is not relevant.
Lord Hughes gave five reasons for overruling the Ghosh test:
- The Ghosh test had the effect that the more warped the defendant’s standards of honesty, the less likely he would be considered dishonest;
- While a subjective element is normally required in criminal law to reflect the defendant’s culpability, there was no need to go as far as Ghosh did. The necessary subjective element could be fulfilled by informing the reasonable person of the facts that the defendant believed or knew.
- Jurors found the Ghosh test confusing or hard to apply.
- The Ghosh test caused an unprincipled divergence between the criminal and civil law (where the standard had always been purely objective).
- Ghosh was based on a misunderstanding of previous authorities, and therefore was wrongly decided as a matter of precedent.