This insightful 12,000 word research project considers the judicially biased adjudication of fiduciary breaches within Australia, Canada, United Kingdom and United States of America.
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 considered violative of the rules of play.
With no option other than to litigate, the appellant claimed recovery of his winnings before the Court of the Queen’s Bench, while the respondents held that in short, the appellant had ‘cheated’ under s.42 of the Gambling Act 2005; which reads 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 held by a majority that the Ghosh test had no place in a cheating scenario, and was therefore 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.””
Hence, 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.”
When we discuss legal proximity there is frequently divided opinion as to (i) just what is meant and (ii) in what context such a term can be properly applied.
By definition, tort cases almost always rely upon proximity when establishing the claimant-defendant relationship, the relative distance between the two parties, and finally any subsequent obligatory considerations shared, though for the sake of clarity, let us begin with the Oxford Dictionary definition of proximity:
Noun [mass noun] nearness in space, time or relationship
Origin: Late 15th century from the French ‘proximité and Latin proximatas, proximus (meaning nearest).
While this explanation appears relatively straightforward, the complexities of human interaction often magnify the context of its use, insomuch as subjective opinion will almost always complicate matters, and leave final judgments in degrees of contention.
This is largely due to a collective inability to agree precisely where proximity fits and how it connects with other strands of legal principle.
Early illustrative proof of the need for exactness would undoubtedly be the speech given by Lord Pearce in Hedley Byrne Co Ltd v Heller and Partners which reads:
“[P]roximity will not be established unless at least the following conditions are satisfied….the plaintiff must be (i) the person directly intended by the maker of the statement to act upon the statement (ii) in a specific transaction of which the maker knows and (iii) for the purpose for which the statement is made. Exceptionally conditions (i) and (iii) may be relaxed provided the plaintiff is a person of whose actual existence (if not name) the maker knows, to whom he knows the statement will be communicated, and who it is likely with a high degree of certainty will act upon the statement in a specific transaction of which the maker knows.”Hedley Byrne Co Ltd v Heller and Partners
Or the even earlier words of Lord Atkin’s ‘neighbour’ speech in Donoghue v Stevenson:
“[S]uch close and direct relations that that the act complained of directly affects a person whom the person alleged to be bound to take care would know would be directly affected by his careless act.”Donoghue v Stevenson
While a simpler definition would be that:
“The claimant must be in an established relationship with the defendant and able to prove that any existing duty of care applied to them, whether through action, inaction or words”Neil Egan-Ronayne (Legal Consultant)
Whichever phrase suits best, the typical contexts for proximity can range from customer and seller, through to diner and chef; in fact, the list of possible scenarios could quickly prove lengthy, yet despite changes in issue the essence of proximity remains essentially undiluted.
That said, the general context of proximity deviated when through the course of accident and tragedy, the witnesses to those sudden and unforeseen events began to claim that the distress and trauma of such emotionally crippling scenes commanded financial assistance from the courts through damages.
In those instances, the fluid definition of proximity was echoed by Lord Wilberforce in McLoughlin v O’Brian, who said:
“Where the relationship between the person killed or physically injured and the person who suffers nervous shock is close and intimate, not only is there the requisite proximity in that respect, but it is readily defensible on grounds of policy to allow recovery.”McLoughlin v O’Brien
Taken further, the emergence of ‘secondary’ nervous shock forced the principle of proximity into new territory by allowing those indirectly receiving terrible news to seek a claim for award under the umbrella of proximation, albeit subject to specific criteria, as defined by Lord Oliver in Alcock v Chief Constable of South Yorkshire Police, who remarked:
“What remains in issue is whether the defendant owed any duty in tort to the plaintiffs to avoid causing the type of injury which each plaintiff complains. In essence this involves answering the twin questions of (a) whether injury of this sort to each particular plaintiff was a foreseeable consequence of the acts or omissions constituting the breach of duty to the primary victim and (b) whether there existed between the defendant and each plaintiff that degree of directness or proximity necessary to establish liability.”Alcock v Chief Constable of South Yorkshire Police
Here, we see a variance in application of the principle of proximity and one demonstrating a generosity of scope over that regulated within everyday examples of arms-length dealings; and whether this broadening stemmed from the degree of harm or was simply the choice of the courts to extend empathy toward genuine loss, is not easily traceable, however there are now notable differences.
Contrastingly, in the United States the ‘dangerous proximity test’ is one used to determine criminal liability at federal and state levels, with the two key principles being (i) that the defendant was dangerously close to completing the crime, or (ii) so close as to a result that the danger was great.
The test itself, was first laid down in 1901, and later adopted by a Judge Learned Hand and read:
“(P)reparation is not an attempt. But some preparations may amount to an attempt. It is a question of degree. If the preparation comes very near to the accomplishment of the act, the intent to compete it renders the crime so probable that the act will be a misdemeanour, although there is still a locus poenitentiae, in the need of a further exertion of the will to complete the crime.”Judge Learned Hand
While under the Turkish laws of contract, the ‘principle of proximity’ comes into effect where non-specification of parties applicable laws during cross-border transactions leaves the courts with the option to default to the nearest jurisdiction, with the effect of establishing implied and express contractual terms, as was explained by Dr. Gülin Güngor in 2008.
So as before, proximity is regularly used to help establish liability, reduce conflict and this time bring levity to matters that might otherwise become bogged down in their own rhetoric.
With this flexible principle proving it an inarguable necessity, it leaves one pondering if proximity is far from a fair weather friend to law and jurisprudence, but rather an overlooked principle deserving to play a broader role in future legal disputes?