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Court of Appeal confirms Ivey test for Dishonesty is correct and clarifies the English Court’s approach to rules of precedent

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By Jonathan Brogden


Published 27 May 2020


An important decision for the determination of offences involving dishonesty and of note for international parties involved in litigation in England.\n 

An important decision for the determination of offences involving dishonesty and of note for international parties involved in litigation in England.



On 29 April 2020, the Court of Appeal heard what can fairly be regarded as an optimistic appeal made by David Barton and Rosemary Booth against their convictions for multiple counts of conspiracy to defraud, fraud, theft and false accounting. The allegations relate to the extraction of millions of pounds from wealthy individuals by the owners and operators of a luxury care home facility over a number of years. In the Liverpool Crown Court, Mr Barton was convicted 10 counts and sentenced to 21 years imprisonment and Mrs Booth convicted on 3 counts and sentenced to 6 years’ imprisonment.


The Appeal

Of the multiple grounds of appeal raised, the primary ground related to the law of dishonesty and whether the decision in Ivey v Genting Casinos (UK) (trading as Cockfords Club) [2017] UKSC 67 was the correct approach to dishonesty and if so, was it to be followed in preference to the test described in R v Ghosh [1982] QB 1053.

At first instance, the Judge had directed the jury on the issue of dishonesty by reference to Ivey rather than Ghosh. In doing so, he did what the Supreme Court in Ivey indicated he should.

The Appellants argued that the Judge should have followed Ghosh because the observations of the Supreme Court in Ivey were made Obiter whilst Ghosh remained binding authority. They also argued that the reasoning in Ghosh was correct and should be preferred to Ivey.


Ghosh and Ivey

The test in Ghosh fixed a 2 stage test, namely (a) was the defendant’s conduct dishonest by the ordinary standards of reasonable people? If so (b) did the defendant appreciate that his conduct was dishonest by those standards?

In disapproving Ghosh, the Supreme Court in Ivey said the correct test was (a) what was the defendant’s actual state of knowledge or belief as to the facts; and (b) was his conduct dishonest by the standards of ordinary decent people? In fixing this new test, the Supreme Court in Ivey indicated that the correct test for dishonesty was as set out in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 and in Barlow Clowes International Ltd v Eurotrust International Ltd [2006] 1 WLR 1476.

In essence, the test in Ghosh led to the unsatisfactory situation that even if, under the first limb, a person’s conduct was regarded as clearly dishonest by the standards of reasonable people, under the second limb, if that person genuinely believed that what he was doing was not dishonest by reference to those objective standards, he was not, in law, dishonest. As was expressed in Ivey, “[Ghosh] has 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.” This unintended effect appears to have come about as a result of the desire to “give effect to the principle that dishonesty, and especially criminal responsibility for it, must depend on the actual state of mind of the defendant…” The Supreme Court in Ivey resolved this unsatisfactory state of affairs by affirming the test formulated in Barlow Clowes that, “Although a dishonest state of mind is a subjective mental state, the standard by which the law determines whether it is dishonest is objective. If by ordinary standards a defendant’s mental state would be characterised as dishonest, it is irrelevant that the defendant judges by different standards…” The Supreme Court in Ivey also determined that there was, “no logical or principled basis for the meaning of dishonesty…to differ according to whether it arises in a civil action or a criminal action.” Their views on this aspect were sufficiently strong for the Supreme Court to comment that, “It would be an affront to the law if [the meaning of dishonesty] differed according to the kind of proceedings in which it arose…


Rules of Precedent

The uncertainty, if it can be called that, which the Appellants sought to be decided here relates to the fact that the Supreme Court in Ivey did not expound its new test for dishonesty in deciding the outcome of that case. Rather, it’s views were expressed Obiter in view of the growing unrest in relation to the second leg of the Ghosh test not correctly representing the criminal law on dishonesty and the divergence in approach between the civil and criminal law on this issue. The Court of Appeal in Barton therefore, had to determine whether it was obliged to follow the Supreme Court’s Obiter determination in Ivey.

It is well established that, in the normal course, the Court of Appeal is bound by the rules of precedent to follow a decision of the Supreme Court (or its predecessor the House of Lords). The issue here was that in Ivey, the Supreme Court’s views were Obiter and, therefore, not ordinarily the binding part of the judgment. In Barton, the Court of Appeal looked closely at the reality of the Supreme Court’s ruling in Ivey. In doing so, it examined and followed the view expressed in R v James & Karimi [2006] QB 588.

In James, the Court of Appeal held (in relation to a case concerning the law of provocation) that it was bound by a decision of the Privy Council and not a decision of the House of Lords. By doing so, the Court of Appeal recognised it was departing from well-established rules of precedent and observed the need for a clear explanation for doing so in order that the rules of precedent were not themselves thrown into turmoil. The Court of Appeal recognised that the Privy Council case they preferred was decided by 9 of the 12 Lords of Appeal and that the Privy Council case was itself concerned to resolve a conflict between decisions of the House of Lords and the Privy Council and to clarify definitively the present state of English Law. The Court of Appeal in James therefore recognised that it had been the Lords of Appeal (ie. in effect the House of Lords) who had, in fact, altered the established approach to precedent and it was not for the Court of Appeal to rule that it was beyond the powers of the Lords of Appeal to do so. In essence, (1) the law Lords sitting in the Privy Council agreed that the decision definitively clarified English Law (2) the majority of the Privy Council constituted half of the Appellate Committee of the House of Lords and (3) the result of an appeal to the House of Lords was, therefore, a foregone conclusion. The Privy Council decision was, therefore, a de facto decision of the House of Lords.



In Barton, the Court of Appeal recognised it was in a very similar position to James, albeit more so because the ordinary rules of precedent required it to follow a decision of the Supreme Court. In finding itself bound by the Supreme Court’s Obiter determination in Ivey, the Court of Appeal stated, “The undoubted reality is that in Ivey the Supreme Court altered the established common law approach to precedent in the criminal courts by stating that the test for dishonesty they identified, albeit strictly contained in obiter dicta, should be followed in preference to an otherwise binding authority of the Court of Appeal [ie. Ghosh]. As in James, we do not consider that it is for this court to conclude that it was beyond [the Supreme Court’s] powers to act in this way.”

The Court of Appeal was extremely careful to recognise the potential for uncertainty that might result from a departure from the ordinary and long establish English rules of precedent: “The rules of precedent exist to provide legal certainty which is a foundation stone of the administration of justice and the rule of law. They ensure order and predictability whilst allowing for the development of the law in well understood circumstances.” However, the Court of Appeal also recognised the fact that these were not rules that were set in stone and which could not be departed from where the circumstances (extremely limited circumstances, justified it: "[The rules of precedent] do not form a code which exists for its own sake and must, where circumstances arise, be capable of flexibility to ensure that they do not become self-defeating.

The Court of Appeal concluded that where the Supreme Court has directed itself that an otherwise binding decision of the Court of Appeal should no longer be followed and determines that an alternative test must be adopted, the Court of Appeal is bound to follow it. In reaching this view, the Court of Appeal clearly recognised this was an extremely narrow and limited departure from the ordinary rules of precedent: “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….[this] approach is necessary…because it forms the foundation for the conclusion that the result is considered by the Supreme Court to be definitive, with the consequence that a further appeal would be a foregone conclusion, and binding on lower courts.

The Court of Appeal in Barton therefore held that the test for dishonesty in all criminal cases is that established in Ivey. However, the Court of Appeal wanted it known that it did in fact endorse the view that the test for dishonesty formulated in Ivey was the correct test and was a test of the defendant’s state of mind to which the standards of ordinary decent people are applied. They stated, “This results in dishonesty being assessed by reference to society’s standards rather than the defendant’s understanding of those standards”. In reaching this view, the Court of Appeal endorsed the view of the Court in Barlow Clowes, in which the Court determined that “acting dishonestly…means simply not acting as a honest person would in the circumstances. This is an objective standard….Honesty has a connotation of subjectivity. Honesty…does have a strong subjective element in that it is a description of a type of conduct assessed in the light of what a person actually knew at the time. However, these subjective characteristics of honesty do not mean that individuals are free to set their own standards of honesty in particular circumstances. The standard of what constitutes honest conduct is not subjective. Honesty is not an optional scale…” On this basis, all matters that lead a defendant to act as they did will form part of the subjective mental state and form part of the fact finding exercise before the objective standard is applied.



Following Barton, the law of dishonesty can be safely regarded as being settled as a matter of English law. That does not mean, however, that every case which engages the determination of the honesty of a defendant will be straightforward or lead to a desirable outcome. Whilst outside the scope of this report, the effect Ivey has on the prosecution of particular offences, for example, conspiracy to defraud and in determining corporate criminal liability, remain to be considered.

The Court of Appeal needed to set out with care and clarity its approach to the departure from the normal rules of precedent. This approach was essential for the purpose of maintaining confidence and predictability in relation to the decisions of the English Courts. It would have been damaging to the primacy of the English Courts in resolving disputes between international parties and where foreign companies and individuals are subject to criminal prosecution for there to be uncertainty as to the application of English common law. The Court of Appeal’s approach brings with it a necessary level of certainty in relation to the circumstances in which the English Court will be prepared to depart from the ordinary and long established rules of precedent.

If you have any questions about the content of this article, please contact Jonathan Brogden, Partner, or Aleksandra Spencer, Associate using the below details.