Lord Nicholls Rules OK?

Like love, 'dishonesty' is something you expect to

recognise when you come across it, and that has been the

starting point adopted by judges in most of the reported cases

in recent years when the issue has arisen. The trouble is, when

faced with the task of coining a working legal test and

definition of dishonesty for use in civil cases, the courts

have failed to fix on an unequivocal approach, setting an

awkward challenge for lawyers when trying to advise their

clients.

A further difficulty is that the principal focus has been on

accessories and those who 'knowingly assist' in

wrongful activity and it remains unclear whether the same test

will, or should be, applicable in all civil contexts where the

conduct of an individual comes under scrutiny.

The issue of uncertainty is whether the conduct in question

should be judged against a strictly objective standard of

honesty, or whether the subjective circumstances and

understanding of the perpetrator should also be taken into

account. Since 1995 there have been specifically relevant

decisions by two Privy Councils, two House of Lords, four

Courts of Appeal, and three Divisional Courts (hearing appeals

from the Solicitors Disciplinary Tribunal), and by assorted

trial judges. Yet the law is likely to remain in flux at least

in some respects. This is primarily because the 3 : 2 majority

decision by the House of Lords in Twinsectra v

Yardley1 (2002) was broadly understood by

lawyers and academics to have set a legal test which required

both, first, an objective appraisal as to whether the defendant

was, in fact, as Lord Hutton put it, "transgressing

ordinary standards of honest behaviour" and then,

second, an enquiry into his own state of mind as to what

"he knows would offend normally accepted

standards...". This dual test has proved difficult

and frequently controversial to apply in practice in subsequent

cases, with the second limb of it being interpreted variously

against wide-ranging or inexplicit criteria.

The Privy Council revisited the issue four years later in

Barlow Clowes v Eurotrust2 (2006),

setting its own interpretation of the second limb of the test

as a requirement simply to apply the objective analysis to what

the person in fact knew at the time, and not as a test of their

subjective values and appreciation. Lord Nicholls asserted that

"acting dishonestly ... means simply not acting as an

honest person would in the circumstances [knowing what he

did]"; and Lord Hoffman made clear 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...