However, in coming to this view, the court also redefined what it is to be dishonest in criminal law, a concept that had gone unchallenged for the previous 35 years. This decision is likely to have significant implications for fraudsters in the corporate world.
The background to the case involved Mr Ivey, who has recently become an inductee into the World Series of Poker Hall of Fame. In 2012 Mr Ivey, working with a fellow professional gambler, Ms Sun, played Punto Banco at Crockfords Casino in Mayfair.
Punto Banco is a card game of pure chance, played against the house but where the odds of winning are slightly, but crucially, in the house’s favour. “Edge-sorting” is where gamblers can spot the small differences in the edges of the cards created as part of the manufacturing process, for example where slightly more of the pattern is visible on one edge of the cards when the cards are machine cut.
Someone who is very observant can spot these differences as the cards are dealt. Mr Ivey and his accomplice managed to dupe the dealer at their table in the casino into rotating the high value cards so that they displayed a different edge to all the other cards, claiming they wanted those particular cards rotated due to being superstitious.
The dealer was unaware of the real reason behind what Mr Ivey and his accomplice were up to. The two started placing larger and larger bets, ending up with winnings of £7.7m. After the event the casino conducted an investigation to work out what had happened. They withheld the winnings and refused to pay them over, though they did refund Mr Ivey’s original stake of £1m.
When Mr Ivey pursued his claim to the winnings through the courts, he asserted that what he had done was not cheating, that instead he had just used a variety of techniques to improve the odds in his favour. The judge who first heard the arguments found that Mr Ivey was truthful in what he said and that Mr Ivey clearly did not believe that he had cheated, but that this did not matter as in the court’s view Mr Ivey’s conduct still involved cheating. As such, Mr Ivey had breached his contract with the casino and the casino did not have to pay over the winnings. As described by the Court, what Mr Ivey and his accomplice did was a “carefully planned and executed sting”.
The Supreme Court went on to re-examine what is required for a person to be found to be dishonest. Most acquisitive criminal offences, such as fraud and theft offences, include reference to the concept of dishonesty, though the statutes do not define what is meant by the term.
The guidance provided to juries on dishonesty was previously set out by the House of Lords in the 1982 case of R v Ghosh and has been applied for the last 35 years. This dealt with dishonesty as a two strand test: first whether the jury considered that the conduct of the defendant in question was dishonest by the standards of ordinary reasonable and honest people. This was the objective aspect of the test.
If the answer to that question was yes, then the jury had to go on to consider whether the defendant realised that ordinary honest people would regard his or her behaviour as dishonest. If the jury did not consider that it had been proven that the defendant realised that their conduct was dishonest by the standards of ordinary honest people, then the defendant was entitled to be acquitted.
It is very common for defendants in fraud cases to claim that they did not realise that what they were doing was dishonest.
The Supreme Court has now in effect changed the guidance which they believe should be given to juries on dishonesty, making it only an objective test. By so doing, they have made the prosecution of the particularly complex fraud offences, like those involving Hayes and other bank traders, potentially considerably easier.
Nichola Peters is head of corporate crime, compliance and investigations at Addleshaw Goddard
