Mayfair Gambler Rewrites Law on Fraud

Phil Ivey, an American gambler who failed in his attempt to compel a Mayfair casino to pay out £7m in winnings and was branded a cheat by the Supreme Court yesterday is likely to become a familiar name to future generations of criminal lawyers. 

Ivey (Appellant) v Genting Casinos (UK) Ltd t/a Crockfords (Respondent) [2017] UKSC 67 is an important case for lawyers and finance professionals because it revises the law on dishonesty.  Defendants in all fraud, theft and business crime prosecutions will have to adapt to the new Supreme Court ruling. 

One of the most common defences raised in business fraud prosecutions is that a defendant has not acted dishonestly. Proving dishonesty is therefore a key requirement for the Crown in fraud and theft prosecutions. Previously the test for a conviction was that set out in R v Ghosh [1982] EWCA Crim 2 which states that a conviction could only result where a jury was satisfied that;

1.      the conduct complained of was dishonest by the lay objective standards of ordinary reasonable and honest people; and, if yes

2.     the defendant must have realised that ordinary honest people would so regard his behaviour;

It is the second limb of that test that the Supreme Court in a unanimous decision primarily focused their ire on. Their main concern was that the Ghosh test did not require a defendant to show that their genuinely held belief refuting dishonesty was also reasonable. Accordingly, this created “the unintended effect that the more warped the defendant’s standards of honesty are, the less likely it is that he will be convicted of dishonest behaviour” [Para 58].

In business crime cases the Court felt that a defendants conduct should be judged against “contemporary standards of honesty” -   “there is no reason why the law should excuse those who make a mistake about what contemporary standards of honesty are, whether in the context of insurance claims, high finance, market manipulation or tax evasion” [Para 59].

Commenting on the decision BSQ fraud partner Roger Sahota said that ‘most fraud cases revolve around one central issue – did the defendant act dishonestly. The ramifications of the Supreme Court’s decision are not clear yet but it may have raised the bar for anyone who denies acting dishonesty. In complex fraud cases Accused persons may be required to show that their conduct and decision making was consistent with industry norms and would not be seen by their contemporaries as dishonest.”  

The full decision is available here. 

If you require advice in a fraud prosecution or investigation please contact our London office.