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Last week, the Supreme Court handed down its judgment in Ivey v Genting Casinos (UK) Ltd  UKSC 67. The colourful facts of the case, involving a professional gambler and an elaborate 'Ocean's 11' type sting, have been widely reported in the national press. However, the judgment also has wider significance for professionals.
The Supreme Court confirmed that the Ghosh test for dishonesty, used in the assessment of both criminal and professional disciplinary proceedings, is no longer the correct test. Instead, the test in Barlow Clowes, already used in civil cases, should be applied universally.
Whilst a welcome clarification, the adoption of the Barlow Clowes standard may mean that professionals may now find themselves at greater risk of findings of dishonesty.
Phil Ivey is one of the world's top poker players. Over two days in August 2012, he won £7.7 million playing 'Punto Banco' (a form of Baccarat) at Crockford's Casino in Mayfair. He did so using a technique called 'edge sorting'. He, and his associate, Cheung Yin Sun, claimed they were superstitious, and convinced an unsuspecting croupier to rotate the edges of the 'good' playing cards (claiming they were lucky) before they were returned to the deck. This meant that all the 'good' cards were rotated in the same way. Due to minute asymmetries in the printed pattern on the reverse of the cards, Mr Ivey was then able to tell when 'good' cards were dealt in later rounds. This significantly increased his odds of winning.
Mr Ivey admitted that he had used edge sorting, but insisted throughout that it was 'legitimate gamesmanship'. The judge at first instance accepted that Mr Ivey did not believe he was cheating but found that he had in fact cheated and, in so doing, had breached an implied term in his contract with the casino.
On appeal, Ivey contended that cheating inevitably involved dishonesty, which he said could not be established in this case.
Lord Hughes, whose judgment was universally approved by the rest of the Supreme Court, found that Mr Ivey had staged a "carefully planned and executed sting", and that 'edge sorting' did amount to cheating, so the implied term had been breached and Ivey could not reclaim his winnings. Further, he held that dishonesty was not a necessary feature of cheating.
He could have ended his judgment there. However, Lord Hughes took the opportunity to discuss the test for dishonesty in English law more broadly.
In R v Ghosh  QB 1053, the Court of Appeal held that the test for dishonesty had two parts:
The defendant is only dishonest if the answer to both questions is 'yes'.
This test was adopted in the civil case of Twinsectra v Yardley  2 AC 164, a case involving a claim against a solicitor for dishonest assistance in a breach of trust. However, the subjective element here is not whether the defendant “must” have realised that his actions were by the standards of ordinary people dishonest but that "he himself realised that by those standards his conduct was dishonest.” Lord Hutton stated “that dishonesty requires knowledge by the defendant that what he was doing would be regarded as dishonest by honest people.”
However, many (including Lord Hughes) believed the subjective element of the test to be problematic. A defendant must realise that 'ordinary, reasonable and honest people' would see his behaviour as dishonest, before the defendant himself can be found dishonest. This arguably allows the defendant to set his own standards. By the same logic, Robin Hood would 'be no robber', and Mr Ivey, who was convinced that he was using a legitimate gambling technique, would not be dishonest.
Until Ivey, the Ghosh test had been applied in all criminal cases involving dishonesty. However, a different approach was taken in civil cases. In Barlow Clowes International Ltd v Eurotrust International Ltd  1 All ER 333, the Privy Council interpreted Twinsectra as providing an objective only test of dishonesty and thus held that, in a claim for dishonest assistance, the test for dishonesty was if, by 'ordinary standards' a defendant's mental state would be characterised as dishonest, then it was irrelevant that the defendant subjectively thought his conduct was honest.
In his judgment in Ivey, Lord Hughes held that the test in Ghosh "does not correctly represent the law and that directions based upon it ought no longer to be given". Instead, he held that the test set out in Royal Brunei Airlines Sdn Bhd v Tan  2 AC 378, as clarified by the Privy Council in Barlow Clowes, should be used in all cases.
Lord Hughes' discussion on the test for dishonesty appears to have been obiter but, given the unanimous endorsement by the other judges of the Supreme Court, it seems likely that his comments will now be followed by lower courts in all cases where dishonesty is alleged.
Civil dishonesty claims against professionals (for example, dishonest assistance cases) will not be affected by the Ivey case. Those cases already followed the test in Barlow Clowes.
However, professional disciplinary cases are likely to be affected. In Bryant and another v The Law Society  EWHC 3043 (Admin), the High Court interpreted Twinsectra in the way it had been applied in the earlier case of Bultitude v The Law Society  EWCA Civ 1853. In Bryant the Court of Appeal held: "In our judgment, the decision of the Court of Appeal in Bultitude stands as binding authority that the test to be applied in the context of solicitors' disciplinary proceedings is the Twinsectra test as it was widely understood before Barlow Clowes, that is a test that includes the separate subjective element. The fact that the Privy Council in Barlow Clowes has subsequently placed a different interpretation on Twinsectra for the purposes of the accessory liability principle does not alter the substance of the test accepted in Bultitude and does not call for any departure from that test." The Court considered that the test for dishonesty in Solicitors Disciplinary Tribunal ("SDT") proceedings should align with the criminal standard, as a finding of dishonesty would usually have grave consequences for a solicitor. The objective and subjective test (based on Ghosh and on Twinsectra as applied in Bultitude/Bryant) has also been applied in disciplinary cases involving other professionals, for example, accountants, medical professionals and barristers.
In light of Ivey, the SDT and other professional tribunals are now likely to apply the objective Barlow Clowes test. Arguably, this will make it easier to prove dishonesty, as it will no longer be necessary to prove that a professional subjectively understood that he or she was acting dishonestly. This may throw up professional indemnity insurance coverage issues and the professional facing a disciplinary investigation may have new challenges to confront.
However, where a professional has been engaged in an objectively dishonest activity (such as, for example, a fraud), it has usually been straightforward to show that he or she subjectively understood their activity to be dishonest as well. The Ivey case may therefore only clarify, rather than change, the law.
In any event, the profession will be waiting for a disciplinary case involving allegations of dishonesty to be prosecuted and determined in order to ascertain how these issues will play out in practice.