#3086 - Fraud And Making Off Without Payment - GDL Criminal Law

• Introduction – Fraud

  - Fraud: d’s acts or words designed to trick v. into parting with property or offering services.

  • before 2007: no statutory offence – common law offence of conspiracy to defraud (but actual offence: theft or obtaining by deception).

    • problematic: app. to new situations, esp. electronic trading.

  • Fraud Act 2006: new offence of fraud; old deception offences abolished.

    • v. little case law: have to rely on statute/old law.

  - Fraud Act 2006: 1 offence of fraud; 3 ways to commit.

  • s1: fraud – by s2, s3 or s4.

    • s1(3): maximum penalty – 10 years.

  • s2: fraud by false representation.

  • s3: fraud by failure to disclose.

  • s4: fraud by abuse of position.

Fraud by False Representation – s2 Fraud Act 2006.

- s2 Fraud Act.

• (1): a person is in breach of this section if he –

  • (a): dishonestly makes a false representation, and

  • (b): intends, by making the representation –

    • (i): to make a gain for himself or another, or

    • (ii): to cause loss to another or to expose another to risk of loss.

• (2): a representation is false if –

  • (a): it is untrue or misleading, and

  • (b): d. knows that it is, or might be, untrue or misleading.

• (3): ‘representation’ – as to:

  • fact

  • law

  • (a): state of mind of d. or (b): any other person.

• (4): representation can be express or implied.

• (5): inc. submission to any system/device designed to receive, convey or respond to communications (with or without human intervention).

• Actus Reus

  - D. makes false representation – s2(1)(a).

  • false rep: one that is untrue or misleading – s2(2)(a).

  • question of fact: jury decides.

  - Representation as to fact, law or state of mind – s2(3).

  • fact/law: straightforward.

  • d’s state of mind: if d. does not in fact hold that opinion/belief.

    • state of mind = fact, if can be ascertained – Edgington v Fitzmaurice [1885].

    • R v King [1979]: d. (car dealer) said mileage on car ‘may be false’ (implying not sure); in fact knew it was false (had altered it) guilty.

  • statement of opinion if d. in better position to know – Smith v Land and House Property Corp [1884]: [Bowen LJ]: if facts not equally well known to both sides statement of opinion by one who knows facts best often = statement of material fact (impliedly states knows facts on which to justify opinion).

  • misstatement of intention – DPP v Ray [1974].

  - Representation can be express or implied – s2(4).

  • implied by words – R v King [1979]: ‘may be false’ = ‘I am not sure’.

  • implied by conduct:

    • R v Barnard [1837]: d. entered bookshop in Oxford in academic gown + bought books; implied rep. that academic, so entitled to discount guilty.

    • DPP v Ray [1974]: d. ordered food at restaurant; implied rep. that intended to pay; did not intend to guilty.

    • R v Williams [1980]: d. took old Yugoslav money to bureau de change; implied rep. that notes valid guilty.

  • NOT by silence alone – R v Twaite [2010; CtMtlAp]: d. (RAF FLt) applied for married quarters in Jun 2008, declared getting married Aug 2008; moved in Aug 2008; not married until Aug 2009 but failed to say anything not false rep.

    • (could have been guilty of fraud by failure to disclose, but not charged).

- Representation can be to communications system/device (with or without human intervention) – s2(5).

• problem with old law: rep. had to be to person did not cover online communications.

  • e.g. Davies v Flackett [1973]: no deception where no other person involved than d.

  • e.g. R v Roziek [1996]: deception to company problematic.

- Fraud by overcharging: relationship of trust + confidence can be fraud.

• prima facie: privity of contract – person entitled to charge what he likes + up to customer to assess.

• R v Silverman [1988]: d. builder overcharged (vulnerable) elderly sisters for work on several occasions guilty.

  • [Watkins LJ]: circs. of mutual trust with 1 party dep. on other for fair + reasonable conduct crime if d. takes advantage by representing as fair charge that which d. but not v. knows is excessive.

  • mechanism: false rep. implied into dealings (re: fairness of charge).

• R v Jones [1993]: d. milkman overcharged (not vulnerable) v. for crates of milk; v. regarded d. as friend guilty.

  • [Auld J]: d. was ‘long time and trusted friend’ of v key factor: trust, not vulnerability of v.

• future cases: could be charged as s2 (false representation) or s4 (abuse of position) s2 more likely: following reasoning in Silverman.

• Mens Rea

  - Dishonesty – s2(1)(a): same test as theft – R v Ghosh [1982].

  • but: s2(1) TA 1968 defences do not apply.

  - Knowing or believing representation to be false – s2(2)(b).

  • subjective test: d. subjectively aware of possibility that representation false.

  • need indifference/disregard, not mere carelessness/negligence – R v Staines [1974]: belief that representation true, however unreasonable not deception.

  - Intention to make gain or cause loss by false rep. – s2(1)(b).

  • need not actually make gain/cause loss: vs. old deception offences.

  • s5: gain + loss defined.

    • s5(2): scope – gain or loss can be:

      • (a): money or other property.

      • (b): can be permanent or temporary.

      • property – any property whether real or personal (inc. things in action + intangible property).

    • s5(3): gain – inc. keeping what one has + getting what one does not have.

    • s5(4): loss – inc. not getting what one might + parting with what one has.

  • cf. MR for blackmail: s21 TA 1968.

  Fraud by Failure to Disclose – s3 Fraud Act 2006.

  - s3 Fraud Act: a person is in breach of this section if he –

  • (a): dishonestly fails to disclose to another person information which he under a legal duty to disclose, and

  • (b): intends, by failing to disclose the information –

    • (i): to make a gain for himself or another, or

    • (ii): to cause loss to another or to expose another to risk of loss.

  Actus Reus

  - Failure to disclose where d. has legal duty to do so – s3(a).

  • legal duty to disclose: not defined in Act; guidance – Law Comm. report on fraud: No 276, Cm 5560, 2002 – inc.:

    • statutory duty: e.g. provisions governing company prospectuses.

    • transaction of utmost good faith: e.g. insurance contract.

    • contractual duty (express or implied).

    • duty arising from custom in particular trade/market.

    • fiduciary duty: e.g. between principal and agent.

  • failure to disclose: question of fact – usually unproblematic.

  Mens Rea

  - Dishonesty – s3(a) – see above.

  - Intention to make gain or cause loss by failure to disclose – s3(b) – see above.

Fraud by Abuse of Position – s4 Fraud Act 2006.

• - s4 Fraud Act:

  • (1): a person is in breach of this section if he –

    • (a): occupies a position in which he is expected to safeguard, or not to act against, the financial interests of another person,

    • (b): dishonestly abuses that position, and

    • (c): intends, by means of the abuse of that position –

      • (i): to make a gain for himself or another, or

      • (ii): to cause loss to another or to expose another to risk of loss.

  • (2): abuse of position inc. omissions + acts.

  Actus Reus

  - D. occupies position requiring him to safeguard/not act against financial interests of another – s4(1)(a).

  • dep. on facts: may arise ‘in any context where parties not at arm’s length’ – Law Comm. Report.

    • professional, fiduciary, long-term business relationship: e.g. trustee/beneficiary; director/company; professional/client position/legal duty: useful but not essential.

    • other relationships of trust: e.g. family; voluntary work.

  • roles: judge decides if capable; jury decides with direction – Law Comm. Report.

  • cf. overcharging cases: rel. of trust + confidence would be covered – R v Silverman; R v Jones.

  - D. abuses of position – s4(1)(b) – question of fact.

  • no guidance: overlap with dishonesty R v Ghosh test?

  • can be omission or positive act.

  Mens Rea

  - Dishonesty – s4(1)(b) – see above.

  - Intention to make gain or cause loss by abuse of position – s4(1)(c) – see above.

Making Off Without Payment – s3 Theft Act 1978.

• - s3 Theft Act 1978:

  • AR: d. makes off without having paid as required or expected for any goods/services.

  • MR: d. knows payment on the spot required or expected from d.; dishonest; intent to avoid payment.

  - Needed: TA 1968 left grey area – where co-incidence of AR + MR not certain: e.g. petrol; food.

  • Edwards v Ddin: d. drove into petrol station; loaded tank with petrol; drove off without paying.

    • problem: petrol appropriated when put into tank; intention not to pay only afterwards.

  Actus Reus

  - D. makes off: leaves place where payment required.

  • R v McDavitt [1981]: d. ate meal in restaurant; did not pay; started to leave but stopped not guilty: had not left.

  - Without having paid.

  • not if some payment offered + accepted (even if worthless) – R v Hammond [1982]: d. paid bill by cheque; cheque bounced not guilty: payment made + accepted.

  - Payment required or expected.

  • not where supplier fails to perform important part of contract with d. – Troughton v MPC [1987; CoA]: drunk d. got into taxi; argued with taxi driver + driven to police station; d. ran away without paying not guilty: payment not required – not taken where agreed in contract.

  Mens Rea

  - Knowledge that payment on the spot required/expected...