Dishonesty in English criminal law

Legal wig copyright David Winch 2014
What is meant by “dishonesty” in English criminal law?  When considering the meaning of dishonesty the criminal courts of England and Wales often refer to a case decided last century.  Recently in the case of R v Hayes [2015] EWCA Crim 1944 the Court of Appeal was asked to think again about the meaning of dishonesty.

 

 

The two-stage ‘Ghosh’ test

The leading case on the meaning of dishonesty in English criminal law is R v Ghosh [1982] EWCA Crim 2.  In that case, decided in 1982, the Court of Appeal determined that there was a two-stage test for dishonesty.  The first stage is based on an objective criterion and the second stage is based on a subjective criterion.  The two stage test was put in the following terms:-

“In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.

If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest. In most cases, where the actions are obviously dishonest by ordinary standards, there will be no doubt about it. It will be obvious that the defendant himself knew that he was acting dishonestly. It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did.”

So not only must the conduct of the defendant be dishonest by the ordinary standards of reasonable and honest people (the objective test) but the defendant himself must have realised that he was acting dishonestly by that standard (the subjective test).

 

The subjective test

As was implied in Ghosh, a defendant is entitled to say, “I did not know that anybody would regard what I was doing as dishonest” and if he is believed he should be acquitted of dishonesty (as the subjective test is not satisfied).

In relation to fraud (an offence which necessarily involves dishonesty) the House of Lords said in the case of Twinsectra Limited v Yardley and Others [2002] UKHL 12 that when making a finding that a person had been dishonest what was required to be shown was “more than [the defendant’s] knowledge of the facts which make the conduct wrongful”.  A finding of dishonesty required proof of “a dishonest state of mind, that is to say, [the defendant’s] consciousness that one is transgressing ordinary standards of honest behaviour”.

A person cannot be dishonest inadvertently or by accident.

 

The objective test

But what of the objective test?  There is of course something circular in the logic of a test which defines dishonesty by the standards of “reasonable and honest people”.  On reflection however it would be surprising if the courts were to propose that the objective legal test for dishonesty should be based on the views of unreasonable or dishonest people.  So the objective test might be restated as applying generally accepted standards to issues of honesty and dishonesty.

In the recent case of R v Hayes [2015] EWCA Crim 1944 the Court of Appeal was asked to reconsider the objective test in the context of the allegations made against the defendant.  Mr Hayes was employed by international banks in the City of London.  The prosecution contended that he had attempted (successfully) to move the LIBOR rates, or get others to agree to do so, to his or his employer’s advantage and that in so doing he had acted dishonestly.  He was charged with conspiracy to defraud.

Part of his defence was that, seen in the context of everyday practices in the City of London at the time in relation to the fixing of LIBOR rates, what Mr Hayes was doing was following what were then generally accepted standards in the banking fraternity.

Mr Hayes considered that what he was doing was common practice in the banking industry at the time and was regarded as legitimate by a significant number of submitters, traders and brokers. He understood that the banks as a matter of practice based submissions relating to LIBOR on their own commercial interests.  His actions were not only condoned, but also encouraged by his employers and he was instructed to act in the way which he did.

On that basis, the defence contended, the objective test for dishonesty was not satisfied.

The Court of Appeal rejected the argument in its entirety as misconceived.  They said:-

“Not only is there is no authority for the proposition that objective standards of honesty are to be set by a market, but such a principle would gravely affect the proper conduct of business.  The history of the markets have shown that, from time to time, markets adopt patterns of behaviour which are dishonest by the standards of honest and reasonable people; in such cases, the market has simply abandoned ordinary standards of honesty.  Each of the members of this court has seen such cases and the damage caused when a market determines its own standards of honesty in this way.  Therefore to depart from the view that standards of honesty are determined by the standards of ordinary reasonable and honest people is not only unsupported by authority, but would undermine the maintenance of ordinary standards of honesty and integrity that are essential to the conduct of business and markets.”

In other words what is generally accepted practice is to be seen in the context of the generality of human behaviour, not in the more restricted context of the industry or market or the particular environment in which the allegedly dishonest conduct had occurred.

 

Conclusion

It is easy to envisage that had Mr Hayes been successful in his appeal similar arguments could have been put forward by others accused of dishonesty – in relation to mortgage fraud for example.

But the long established two-stage Ghosh test has been re-affirmed and continues to be the benchmark for issues of dishonesty in the criminal law of England and Wales.

 

Contacting us

Our contact details are here.

David

(Note: This article discusses issues of dishonesty in the criminal law of England and Wales.  There are a number of additional issues which could be relevant to a defendant’s trial in particular cases which it is not possible to deal with in a relatively short article such as this.  Appropriate professional advice should be sought in each individual case.)

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