Recent Developments in Dishonesty in the Professional Regulatory Sector

Dishonesty and Integrity – a summary post Wingate

2017 and early 2018 has seen a large number of appeals going through the courts from decisions of regulators in different sectors and in relation to different aspects of the regulatory processes.

Dishonesty has been one of the subjects that has found itself at the centre of a number of important appeals.

How dishonesty should be approached by tribunals in the professional regulatory field has of course been a focal point with the decision of Ivey (Appellant) v Genting Casinos (UK) LTD T/A Crockfords (Respondent) [2017] UKSC 66 leading the way with a new ‘test’ for dishonesty, and leaving the two-limbed Ghosh test behind.  However other aspects of dishonesty have also featured and are no-less significant; from how dishonesty should be approached when it comes to sanction to the distinction between a lack of integrity and dishonesty.

This article seeks to provide an overview of recent developments in this interesting and highly relevant subject for the regulation of professionals, for whom honesty is such a crucial aspect of fitness to practise.

Ivey (Appellant) v Genting Casinos (UK) LTD T/A Crockfords (Respondent) [2017] UKSC 66

The court was concerned with whether card turning in a game of Punto Banco amounted to cheating.  Whilst ruling that it did, it also took the opportunity to reconsider the Ghosh test which had been in place for some 35 years.

The oft-quoted Ghosh test for dishonesty, which could be quoted on auto-pilot given its frequent application, had both objective and subjective limbs for the fact finder to consider when faced with allegations of dishonesty.  It required the prosecution, or regulatory body, to prove (1) that the conduct complained of was dishonesty by the objective standards of ordinary, reasonable and honest people and (2) that the defendant must have realised that ordinary honest people would regard the behaviour as dishonest.  Following Ivey, the second limb has disappeared.  Lord Hughes criticised the idea that the law should excuse those who have made a mistake of fact as to the acceptable standards of honesty set by society and thus criticised the idea that someone must know that they were being dishonest by objective standards.

Post-Ivey, Committees will now apply the following test when dishonesty is in question:- “….. the fact-finding tribunal must first ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.”

GMC v Krishnan [2017] EWHC 2892 (Admin)

The case of Krishnan in November 2017 was the first attempt by the High Court to interpret dishonesty, in the context of professional regulation, since Ivey.

This decision of the Queen’s Bench Division, supports Ivey as good law and as the correct approach to be applied in regulatory proceedings.  The court confirmed that the approach, in accordance with Ivey, was that the Panel should have first determined the Respondent’s state of mind as to the facts and then gone on to consider whether his conduct was dishonest by the standards of ordinary decent people.  It was confirmed that “Ivey is clear authority for the proposition that in a case such as this the Tribunal should not have considered whether the Respondent must have realised that his conduct was dishonest by the standards of ordinary decent people.”

This decision thus confirms that Ivey does not simply invert the objective and subjective limbs of the Ghosh test but rather that the objective element of Ivey flows on from the individual’s actual state of mind not what he or she should have realised was dishonest by the standards of ordinary decent people:

“… the first stage (objective) Ghosh test is not the same as the second stage (objective) Ivey test. The objective test in Ghosh had to be applied without reference to the actual state of mind as to knowledge or belief as to facts of the individual concerned”.

Because this case straddled the Ghosh and Ivey changeover, HHJ Sycamore held that it was inappropriate for the Court to substitute its own decision on dishonesty drawing on the findings of the Tribunal and so the matters were remitted to the MPT to re-consider applying the correct Ivey approach.

Beyond confirmation that Ivey should be the test followed in matters of professional regulation, we will have to wait for an appeal on the interpretation of Ivey rather than merely its application to certain facts.  The focus is now on the first tier tribunals who will have the task of applying the new Ivey approach as it stands.

Lusinga v NMC [2017] EWHC 1458 (Admin)

This case considered another aspect of dishonesty; that of how dishonesty should be approached when it comes to considering sanction.  In summary the court held that care must be taken to consider where on a properly nuanced scale of dishonesty the misconduct falls at all points of the regulatory process.

This decision highlights that what sanction a finding of dishonesty will result in is thus becoming far less clear-cut than it once was where proven allegations of dishonesty would almost inevitably lead to removal from the register, or a lengthy term of suspension – but rightly so.

Dishonesty is a more nuanced issue than the oft-quoted cases of fraudulent financial gain or active deception and incorporates a wide range of wrong-doing. Consequently, care must be taken at all stages of the regulatory process; from the point of the drafting of allegations to sufficiently particularise or explain the nature of the dishonesty so as to avoid equivocal admissions, through to the fitness to practice committees proper consideration of the nature of the dishonesty as well as all relevant mitigating factors.

Whether the dishonesty is ‘passive’ rather than ‘active’ should also have a bearing on where the wrongdoing is placed on the scale of dishonesty.

The Indicative Sanctions Guidance documents of regulatory bodies should reflect the different forms of dishonesty and be more nuanced, which might in turn assist Committees in correctly approaching the nature or level of dishonesty so as to reach more fairly balanced and reasoned decisions at the sanction stage. Action should therefore be taken by the various regulatory bodies to amend their guidance documents in order to assist panels in their consideration of allegations of dishonesty.

Wingate, Evans and Malins v SRA (2018) EWCA Civ 366

Yet another aspect of dishonesty was considered most recently in March 2018 in this case in which the Court of Appeal addressed the difference between dishonesty and a lack of integrity but also reviewed the ‘kaleidoscope of authorities’ on dishonesty ‘to consider what the law now is’.  This flowed on from decisions last year in Malins v SRA [2017] EWHC 835(Admin), Newell – Austin v SRA [2017] EWHC 411 (Admin) and Peter Rhys Williams v SRA [2017] EWHC 1478 (Admin) and just goes to show the fast paced nature of appeals in the professional regulatory field.

The current position is that a lack of integrity is different to dishonesty.

At paragraph 93 Jackson L stated- “Honesty is a basic moral quality which is expected of all members of society.  It involves being truthful about important matters and respecting the property rights of others.  Telling lies about things that matter or committing fraud or stealing are generally regarded as dishonest conduct.  These observations are self-evident and they fit with the authorities cited above.  The legal concept of dishonesty is grounded upon the shared values of our multi-cultural society.  Because dishonesty is grounded upon basic shared values, there is no undue difficulty in identifying what is or is not dishonest.  The general law imposes criminal and/or civil liability for many, but not all, dishonest acts or omissions.  As explained most recently in Ivey, the test for dishonesty is objective.  Nevertheless the defendant’s state of mind as well as their conduct, are relevant to determining whether they have acted dishonestly.”

Jackson L then turned to consider integrity, explaining it as a broader, more nebulous concept than dishonesty and therefore harder to define.  “In professional codes of conduct, the term ‘integrity’ is a useful shorthand to express the higher standards which society expects from professional persons and which the professions expect from their own members….. The underlying rationale is that the professions have a privileged and trusted role in society.  In return they are required to live up to their own professional standards.  …. Integrity connotes adherence to the ethical standards of one’s own profession.  That involves more than mere honesty…. to take one example, a solicitor conducting negotiations or a barrister making submissions to a judge or an arbitrator will take particular care not to mislead.  Such a professional person is expected to be even more scrupulous about accuracy than a member of the general public in daily discourse.”

Jackson L then set out a list of examples of what would constitute as acting without integrity.

The court of Appeal has thus ruled that dishonesty and lack of integrity cannot be treated as synonymous; integrity was about more than simply acting honestly.  The ruling of Mostyn J in Mallins, as recently as last summer, was thus set aside  and Jackson L concluded that the judge had erred in holding that integrity in SRA principles had the same meaning as dishonesty.

This case has therefore resolved the conflicting authorities of Malins v SRA [2017], Newell-Austin v SRA [2017] and confirmed another case of 2017, that of Peter Rhys Williams v SRA – that even post Ivey, which did away with the subjective limb in the test for dishonesty – there is a distinction between honesty and lack of integrity.

In terms of implications for regulators, might this mean a reduction in allegations of dishonesty and an increase in allegations of a lack of integrity, as a ‘useful shorthand’ as Lackson LJ described it for the higher standards expected of professional people, and as perhaps easier to prove than allegations of dishonesty?

From the GMC, NMC and SRA – just a few examples of the raft of significant decisions at appeal level in just one discreet subject of dishonesty in regulatory proceedings, quite apart from other important developments in other subjects within the field.