Today marks exactly one year to the day that I first started writing the ‘voluminous’ Case Law Compendium: U.S. Law, and its pretty incredible to think that so much time has already passed, particularly given that I’m not even midway through the book yet!
Anyway, needless to say my hard work continues on undaunted, and I’m hoping to share the first half of the criminal law section here in the next couple of weeks, so watch this space if you’re interested to learn more…
In a case that was to result in a reduction of the Ghosh two-step dishonesty test, a professional card player is left with no choice but to pursue his winnings in the courts when the gaming establishment liable for the payout, cries foul on the pretence of cheating, which itself proves a concept that continues to elude judicial narrowness due to its mutable interpretation and seemingly countless applications.
Having established himself as reputable ‘advantage’ poker player in his home country of the United States, the appellant had spent a considerable number of hours playing Punto Banco at the respondents gambling house in Mayfair London, when at the point of his retirement, he had amassed winnings in excess of £7.7m, after which the respondents refused to release the funds on the premise that when playing against the house, the appellant had resorted to a number of techniques that were considered violative of the rules of play.
With no option other than to litigate, the appellant appeared before the Court of the Queen’s Bench, claiming recovery of his winnings while the respondents held that in short, the appellant had ‘cheated’ under s.42 of the Gambling Act 2005, which reads in part that:
“(1) A person commits an offence if he (b) cheats at gambling….”
While the Act also notes that:
(3) Without prejudice to the generality of subsection (1) cheating at gambling may, in particular, consist of actual or attempted deception or interference in connection with (a) the process by which gambling is conducted….”
In the first instance, the court noted that there was uncertainty as to whether the element of dishonesty was applicable to a claim of cheating, or if by definition, the act itself denoted dishonest intent, regardless of objective or subjective jury opinion, all of which left the court unable to determine if s.42 had in fact been breached, and so instead concluded that such claims would be best remedied in a civil court, thus the claim was dismissed, while the court held that:
“What precisely is condemned as cheating by section 42 of the 2005 Act and what must be proved to make out the offence is not, in my view, clear and it would be unwise if it is unnecessary, as it is, for me to attempt to determine what that might be.”
Whereupon the appellant pursued his claim in the Court of Appeal, who conversely held by a majority that the Ghosh test had no place in a cheating scenario, and was thus inapplicable to s.42 of the 2005 Act, although it was held by Lady Justice Arden that:
“[A] person may be liable to a criminal penalty for cheating if he deliberately interferes with the process of a game so that the game is then played to his or another’s advantage in a way which was never intended by the participants.”
And so when presented to the Supreme Court, the appellant continued his line of argument, while the court attempted to establish if dishonesty as defined by Ghosh, was to become an integral part of cheating under the 2005 Act, and if so, whether the appellant was guilty, and thereby liable for sentencing.
For clarity, the Ghosh test for dishonesty was based on the principle that:
“It is no defence for a man to say “I knew that what I was doing is generally regarded as dishonest; but I do not regard it as dishonest myself. Therefore I am not guilty.” What he is however entitled to say is “I did not know that anybody would regard what I was doing as dishonest.””
Thus having provided a thorough examination of the case itself, along with the mottled history behind the Ghosh test, the court took the liberty of simplifying the dishonesty test through the removal of the subjective element, and so while finding the appellant liable for cheating through his manipulation of the croupier, the court dismissed the appeal, while revising their standing on dishonesty by holding that:
“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.”
In a case embroiling both arms-length and personal agreements, the unavoidable overlapping of contract and equity are held to extensive scrutiny in a suit between corporations and individuals across two jurisdictions.
After an American surgical staple manufacturer entrusted their foreign sales to a New York salesman, the man whose reputation historically rested upon a handshake eventually used his informal approach to business to establish an overseas corporation, under which he manufactured his own version of the patented staples and promoted them to an Australian market via the prolific brand name used by his new business partners.
Upon discovery his underhand scheme, the now respondents sued for damages in the New South Wales Supreme Court under § 2-306(2) of the Uniform Commercial Code, which read that:
“A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.”
While contesting that any sales accrued during the years accounted for were now held upon constructive trust for the respondents.
In the first instance, the court found that a fiduciary relationship had become evident when the respondents had entrusted their product in the appellant, therefore showing a unique vulnerability to his actions when working overseas, while under challenge before the Court of Appeal, the court supported the principle of a constructive trust and thus held accordingly.
Presented to the High Court of Australia, the question of trust relationships and contractual breach became central to the issue in hand, and so the court quickly noted that the contract rested upon verbal agreements and subsequent exchanges of correspondence, yet no legally binding agreements had been entered into; and so when examining the question of validity the court referred to Oscar Chess Ltd v Williams, in which the English Court of Appeal illustrated that a representation made during contractual negotiations could also be construed as a binding warranty, and so held that:
“The question whether a warranty was intended depends on the conduct of the parties, on their words and behaviour, rather than on their thoughts. If an intelligent bystander would reasonably infer that a warranty was intended, that will suffice.”
However the court also noted that in order for any implication of a warranty to sustain judicial scrutiny it must be:
Reasonable and equitable
Necessary so as to show that the contract would be useless without it
So obvious to the bargain that it needs no expression
Capable of clear expression if called upon
Wholly supportive of the contract
And so moving on to the concept of fiduciary obligations arising from the heart of the working relationship, the court noted that in Reading v The King the English Court of Appeal held how:
“[A]‘fiduciary relation’ exists (a) whenever the plaintiff entrusts to the defendant property, including intangible property as, for instance, confidential information, and relies on the defendant to deal with such property for the benefit of the plaintiff or for purposes authorized by him, and not otherwise….and (b) whenever the plaintiff entrusts to the defendant a job to be performed, for instance, the negotiation of a contract on his behalf or for his benefit, and relies on the defendant to procure for the plaintiff the best terms available….”
Yet in vol. 25 of the University of Toronto Law Journal (1975) it also reads that in commercial dealings:
“[A] mere sub-contractor is not a fiduciary. Although his work may be described loosely as work which is to be carried out in the interests of the head contractor, the sub-contractor cannot in any meaningful sense be said to exercise a power or discretion which places the head contractor in a position of vulnerability.”
Therefore with little to warrant the existence of either a trust/trustee relationship or the presence of fiduciary duty with which to underline the machiavellian behaviour of the appellant, the court remitted the case back to the New South Wales Supreme Court with a view to an assessment of damages in favour of the respondents.
I am very pleased to announce that after studying and writing around 73 historically significant U.S. civil procedure cases, this first chapter of my second case law compendium is now finally complete.
In all honesty it has been an absolute pleasure to work on, and I have learnt much about U.S. law, and by comparison to English case law transcripts, this experience has revealed many judicial differences in both approach and determination, most of which lends an endearing quality to the American style of prose and execution, an outcome that comes as a pleasant, if not unexpected surprise, while it must be equally stressed that when embracing not only State but federal laws, the legal fabric of this diverse and yet oddly familiar country always keeps me excited and frustrated when tying up the necessary facts and vital components required.
On a side note, my relationship with the Bluebook is naturally growing by the day, and I am glad to know that it’s not only me that finds it perplexing to navigate (as countless Google searches have testified), and yet if someone were willing to pay me, I would be happy to rewrite this complex little book so that maybe it might prove more ‘user friendly’, but I doubt that will happen anytime soon…
As a reward, I shall celebrate tonight with one or two American ales and few episodes of ‘Friends’ as tomorrow work will again begin on Constitutional Law, and needless to say I am very much looking forward to discovering even more about the laws and practices of the United States of America as the weeks and cases unfold.
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