In the recent case of Barton and Booth v R  EWCA Crim 575, a five-judge Court of Appeal has confirmed the test for dishonesty to be used in criminal cases. The law in this area had been in a state of uncertainty following comments by the Supreme Court in a civil case, Ivey v Genting Casinos  A.C. 391, that the two-stage Ghosh test for dishonesty, which had been applied for over 35 years, no longer represented the correct approach.
As practitioners in this area will know, the two-stage test for dishonesty in R v Ghosh  QB 1053 required a jury first to determine whether the accused had been dishonest according to the ordinary standards of honest and reasonable people (the 'objective test') and, if the answer to that first question was yes, to go on, secondly, to consider whether the accused had realised that what he or she was doing was dishonest by those standards (the 'subjective test').
However, the Supreme Court in Ivey (a case concerning cheating in a casino) sought to clarify "why the law had taken a wrong turn in Ghosh." In comments forming part of the obiter dicta (therefore essentially expressions of opinion not legally binding as precedent) Lord Hughes set out that the correct approach to assessing dishonesty is the first limb of the Ghosh test, i.e. the objective test, and that it was not relevant to apply the second limb of the Ghosh test, i.e. the subjective test.
The Court of Appeal judgment in Barton and Booth brings this uncertainty to an end.
David Barton ran a luxury nursing home. The case against him was that he dishonestly exploited his relationship with vulnerable elderly residents by befriending and grooming them, ultimately to profit from their wealth. A number of residents made Barton the residuary beneficiary of their wills, allowed him to assume control of their finances, gave him large cash gifts, overpaid for services and paid fees that were vastly in excess of what would be reasonable, or were sometimes entirely fabricated. Rosemary Booth was the general manager of the home and was alleged to have abused her trusted position to act as the 'eyes and ears' to assist Barton in the fraudulent activity.
Following a trial which concluded in 2018, Barton was convicted of 10 counts consisting of four counts of conspiracy to defraud contrary to common law, three counts of theft, one count of fraud, one count of false accounting, and one count of transferring criminal property. Booth was convicted on three counts of conspiracy to defraud. In his summing up, the trial judge directed the jury on dishonesty by reference to the test in Ivey and not Ghosh.
As part of wider grounds of appeal, it was submitted that the trial judge should have followed Ghosh because the observations in Ivey only formed part of the obiter dicta in that case and were not therefore binding.
The judgment of the Court of Appeal ("the Court")
The first question required the Court to consider the status of the Supreme Court's comments in Ivey. The Court concluded that "where the Supreme Court itself directs that an otherwise binding decision of the Court of Appeal should no longer be followed and proposes an alternative test that it says must be adopted, the Court of Appeal is bound to follow what amounts to a direction from the Supreme Court even though it is strictly obiter. To that limited extent the ordinary rules of precedent (or stare decisis) have been modified. We emphasise that this limited modification is confined to cases in which all the judges in the appeal in question in the Supreme Court agree that to be the effect of the decision."
The Court therefore confirmed that the test for dishonesty in all criminal cases is that set out in Ivey. This test requires the jury to consider the accused's "actual state of mind as to knowledge or belief as to the facts" (per Lord Hughes in Ivey) which the Court in Barton confirmed meant that "all matters that lead an accused to act as he or she did will form part of the subjective mental state, thereby forming a part of the fact-finding exercise before applying the objective standard". The "objective standard" requires the jury to apply the standards of ordinary honest people to the facts as ascertained by the "fact-finding exercise" and "with those facts being judged by reference to the usual burden and standard of proof".
Now that it is firmly established that Ghosh is consigned to history and that Ivey and Barton represent the state of the law in relation to the test for dishonesty, attention will turn to what impact the removal of the 'subjective test' may have.
At first sight, it would appear to make it harder for the defence (and thus easier for the prosecution) in cases where previously the accused would have argued that the 'subjective test' in Ghosh was not satisfied, i.e. in cases where the accused argued that he did not realise that what he or she was doing was dishonest by the ordinary standards of honest and reasonable people. This may be particularly relevant in cases where there is an established industry or sector practice in which everyone engages, but which - when it comes under external scrutiny - is alleged to be dishonest. The investigations and prosecutions arising from LIBOR submissions are one such example, and it will be interesting to see whether the removal of the 'subjective test' will encourage prosecutors to take on cases relating to conduct which is industry-specific and established but which might be regarded as falling foul of generally accepted standards of honesty.
No longer will a jury have to be separately satisfied that the 'subjective test' is met, but instead the accused's state of mind will simply form part of the fact pattern against which the "objective standard" of dishonesty will be applied. While an accused, when giving evidence in his own defence, can explain to a jury what his belief and understanding was, and how he thought that he was not acting dishonestly, it will be interesting to see to what extent the defence will be permitted to introduce other evidence of the reasonableness of that belief or the extent to which it was widely held.
In practice, it will remain to be seen whether the Ivey test simplifies the issue of dishonesty for a jury (and the prosecution) by removing the opportunity for an accused to argue that the 'subjective test' is not satisfied by taking advantage of his own view of what was honest and dishonest. For those who are critical of a move to an entirely objective test, the acknowledgment that the accused's "actual state of mind as to knowledge or belief as to the facts" is part of the relevant evidence against which the jury must apply the objective test may provide some degree of comfort. And who can predict whether inclusion of the accused's subjective belief as part of the relevant evidence which the jury must consider, when applying the "objective standard", may still come to present an obstacle in the road to conviction in cases where the conduct in questions falls into that unclear grey area.
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