Honesty and Integrity: Two Sides of the Same Coin?
In the recently-released landmark judgment in the appeal of Francis v The JFSC, Mr Francis’s legal team argued that the JFSC’s finding of lack of integrity was tantamount to a finding of dishonesty, albeit that the regulator had not made a separate finding of dishonesty. The Royal Court disagreed. It found the position under English law was that the majority of the authorities support the conclusion that:
“A lack of integrity does not require dishonesty (although a finding of dishonesty necessarily includes a lack of integrity).”
So no, honesty and integrity are not two sides of the same coin.
All principals of regulated financial services businesses are required by Jersey's regulatory laws and Codes of Practice to ensure their business is conducted with integrity at all times.
The Royal Court fully endorsed the JFSC’s findings that Mr Francis, the former CEO and principal shareholder of the Horizon Group, had acted with a most serious lack of integrity and incompetence of a very serious kind. The Royal Court also agreed with the JFSC that a ban from working in the Island’s finance industry was a reasonable sanction.
The hearing before the Royal Court was held over four days in April 2017, with the judgment being handed down in December 2017. The judgment was then embargoed from publication pending the outcome of Mr Francis’ appeal against the judgment to the Court of Appeal. The appeal was abandoned in May 2018 and publication then followed.
Advocates Beverley Lacey and Eloise Layzell appeared on behalf of the JFSC. Solicitor Michelle Cabot project-managed the case. Such appeals to the Royal Court ordinarily take half a day of court time and are heard within four months of the appeal being issued. The Royal Court found Mr Francis’ appeal was a root and branch attack on the JFSC’s procedures and integrity. In this unprecedented appeal, 20 interlocutory hearings took place, the appeal took almost four years to conclude, and the hearing itself spanned four days.
Further Legal Developments
Since the handing down of the Royal Court judgment, the English Court of Appeal in the case of Wingate v SRA (March 2018) has ruled on whether the concepts of “integrity” and “honesty” in the context of professional disciplinary proceedings are synonymous. The Royal Court’s approach in Francis v The JFSC remains consistent with that judgment.
In Wingate the Court of Appeal comprehensively examined the relationship between the sister concepts of honesty and integrity. Honesty was considered to be:
“… 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. […] 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."
On integrity, the Court of Appeal explained:
“… as a matter of common parlance and as a matter of law, integrity is a broader concept than honesty. […] Integrity is a more nebulous concept than honesty. Hence it is less easy to define, as a number of judges have noted. 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.”
The Court of Appeal explained that the general law imposes criminal and/or civil liability for many, but not all, dishonest acts or omissions. In the recent case of Ivey v Genting Casinos (2017), the Supreme Court clarified that 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.
The broad contours of what integrity means in the context of professional conduct have also been explored by the UK Financial Services and Markets Tribunal (see separate note). “Integrity” connotes adherence to the ethical standards of one's own profession. That involves more than mere honesty.
The duty to act with integrity applies not only to what professional persons say, but also to what they do. However, the Court of Appeal cautioned against courts and professional tribunals setting unrealistically high standards. The duty of integrity does not require professional people to be paragons of virtue. In every instance, professional integrity is linked to the manner in which that particular profession professes to serve the public.
The Court of Appeal in Wingate went on to observe that a jury in a criminal trial is drawn from the wider community and is well able to identify what constitutes dishonesty. A professional disciplinary tribunal has specialist knowledge of the profession to which the respondent belongs, and of the ethical standards expected of that profession. Accordingly, such a body is well placed to identify a lack of integrity.
The Royal Court in Francis v The JFSC recommended that the JFSC issue guidance on its approach towards assessing integrity within the laws and relevant codes.