#4622 - Fraud And Making Off Without Payment - GDL Criminal Law

Fraud Act 2006 (FA)

• At the moment – there is little case law so reliant on statute and old cases

• Three different ways in which fraud can be committed:

1. Fraud by false representation - s2

2. Fraud by failure to disclose – s3

3. Fraud by abuse of position – s4

• Max penalty (s1) is 10 years in prison or unlimited fine

Fraud by false representation

Section 2

AR:

• Express/implied representation

• S2(4) : representation may be express or implied

• An implied representation can arise from what the D does in fact say (R v King) or from his conduct (Barnard; DPP v Ray; R v Williams)

• R v Williams: presenting bank notes and coins which he knew they were obsolete

• R v Barnard : pretending to be an Oxford academic to receive discount

• DPP v Ray: eating in a restaurant is making a representation that there is an intention to pay (intention – if the D expresses an intention to do something which he doesn’t intend, there is a false representation)

• Implied representation by silence alone?

  • R v Twaite (2010): pure silence alone CANNOT be fraud by false representation

1. Representation as to fact, law or state of mind: s 2(3)

• Representation as to one’s belief may satisfy s2 if it can be shown that the D does not in fact hold that opinion or belief

• Edgington v Fitzmaurice: ‘it is very difficult to prove what the state of a man’s mind at a particular time is, but if it can be ascertained it is much a fact as anything else’

• R v King: 2nd hand car dealer stated on a sticker that the mileage reading on a particular car ‘may not be correct’ – implied he wasn’t certain that the reading was wrong when in fact he knew it was as he had altered it himself

• If the D is in a better position to express the belief or opinion than the other party this may also amount to a false representation

  • Smith v Land and House Property Corp- ‘if the facts are not equally known to both sides, then a statement of opinion by the one who knows the facts the best involved very often a statement of material fact, for he impliedly states that he knows facts which justify his opinion

2. The representation must be untrue or misleading: s2(2)(a)

• Issue of fact for the jury to decide

• Unclear as to what ‘misleading’ adds – See Smith & Hogan

Fraud by overcharging

• Basic rule in English law dictates that a person is entitled to charge whatever sum he thinks appropriate – ‘buyer beware’

• But criminal liability in certain circumstances

• R v Silverman:

  • Builder overcharged for work on two elderly sisters’ home – circumstances of mutual trust, D dishonestly represented the charges as fair

  • Watkins LJ placed emphasis on the vulnerability of the V

• R v Jones:

  • Even though V was not vulnerable In the same way as in Silverman, the D was found guilty on the basis that there was a trust relationship between the D and the V

• N.B Both cases referred to trust - could be possible to convict someone with fraud by abuse of position (Fraud Act s 4) rather than false representation

Deceiving a machine

‘It takes two to lie. One to lie and one to listen’ - Homer Simpson

• Old law: no offence where no person was involved in the transaction – e.g. Davies v Flackett

• This caused problems where the V was a company – R v Roziek

• Likely to cause problems in the modern era – internet etc.

S2(5): ‘for the purposes of this section a representation may be regarded as made if it (or anything implying i) is submitted in any form to any system or device designed to receive, convey, or respond to communications (with or without human intervention)’

• Most likely device is a website

MR:

• Dishonesty

• Apply Ghosh test- BUT – the negative definitions of dishonesty contained in the Theft Act s2(1) apply only to the offence of theft and so not to the Fraud Act

• R v Clarke- Trial judge mistakenly directed jury that making deceptions is necessarily dishonest – rather, you must prove both

• Knowing or believing the representation to be false

• D must know, or be aware, that the statement is false or misleading (s2(2)(b)) – will be satisfied if he is subjectively aware of the possibility that what he is saying or implying is false

• R v Staines – CA held that recklessness with regard to false statement requires more than carelessness/negligence – must be indifference/disregard to whether statement is true

• A belief that a statement is true, however unreasonable will prevent conduct from amounting to deception

• Intention to make a gain or cause a loss

• Distinction btw old deception offences and those created by the Fraud Act

• Deception offences – required that the D actually gain something as a result of false representation

• Fraud Act: all that is required is that the D intended to make a gain – even if no such gain arose – and even more widely – intended to make a gain for himself OR for someone else – OR that he intends to cause a loss to another, or even to expose someone to a risk of loss

S5 – full definition of ‘gain’ and ‘loss’

• Can be temporary or permanent

• Keeping what one already has

• Loss – not getting what one would otherwise get – s5(4) – See Blackmail – TA 1968 s21 & s34 – but extra possibility in basic definition of MR – ‘exposing another to a risk of loss’

  • If you think it will expose them to risk

Fraud by failure to disclose

S3:

A person is in breach of this section if he-

1. Dishonestly fails to disclose to another person information which he is under a legal duty to disclose, and

2. Intends, by failing to disclose the information –

1. To make a gain for himself or another, or

2. To cause loss to another or to expose another to a risk of loss

AR:

• Existence of a legal duty

• No attempt to define the type of duty which this section applies to In the act

• Guidance from the Law Commission’s report on Fraud which led to the Act – examples of types of duty

  • Arising from statute (e.g. company prospectuses)

  • Duty arising from a transaction of the utmost good faith (e.g. contract of insurance)

  • Duty arising from express/implied terms of a contract

  • Duty arising from a custom in a particular trade/market

  • Duty arising from a fiduciary relationship (btw principal and agent)

• Failure to disclose – this will be a matter of fact and is usually easy to prove

MR: similar to those under s2 – D must be dishonest and must intend to make a gain for himself or another, cause a loss or expose someone to a risk of loss

Fraud by abuse of position

Section 4

1. A person is in breach of this section if he –

1. Occupies a position in which he is expected to safeguard, or not to act against, the financial interests of another person,

2. Dishonestly abuses that position, and

3. Intends, by means of the abuse of that position –

1. To make a gain for himself or another, or

2. To cause loss to another or to expose another to a risk of loss

2. A person may be regarded as having abused his position even though his conduct consisted of an omission rather than an act

AR:

• Occupies a position in which he is expected to safeguard:

• As with legal duty required by s3 – Fraud Act does not seek to define the type of position required – except to state that this position must be one requiring the D to look after the V’s financial wellbeing

• Relationship required by s4 will be easy to prove where there is a professional fiduciary or long-term business relationship – but s4 fraud is not limited to such relationships

  • E.g. volunteer; family (if you take responsibility for financial wellbeing)

• Also possible that circumstances similar to in R v Silverman/R v Jones could be covered by s4 rather than s2 – still need to establish breach of confidence

• Abuse of position:

• Must prove abuse – will be a matter of fact decided in each individual case

• Again no guidance in the statute – possible that there is a overlap with the question of whether the D has acted dishonestly –application of Ghosh – but need for further guidance on this

MR:

• Mirrors MR for s2/s4 – D must act dishonestly and intend to make a gain for himself /another and a loss/ exposure to loss

Making off without payment

• Offence created in the Theft Act 1978 – s3:

‘A person who, knowing that payment on the sport for any goods or services done is required or expected from him, dishonestly makes off without having paid as required or expected and with intent to avoid payment of the amount shall be guilty of an offence’

Why the need for this offence?

• Difficult to charge someone with theft where there is no coincidence between AR and MR

  • Edwards v Ddin: D filled his car with petrol and drove off – cannot prove that the MR occurred at the time of the AR (may only decide to steal the petrol once it is in the car then there is no coincidence

  • Could also arise with food at a restaurant – restaurant will not want it back after you have eaten it (or cannot get it) – so if you only decide not to pay after eating then you cannot be guilty of theft

• Examples:

  • R v McDavitt: charged with making off without payment – but the problem was that he hadn’t actually made off - he could have been charged with attempting to make off but he was wrongly charged and so wasn’t convicted

  • R v Hammond – paid a bill which subsequently bounced and returned dishonoured – he didn’t make off without payment as left legitimately (shopkeeper allowed him...