Fraud

Question 1

S1 Fraud Act 2006

Answer 1

A person is guilty of fraud under s1 Fraud Act 2006 if they are in breach of any of the sections listed in s1(2).

• s1(2)(a) section 2 (fraud by false representation),
• s1(2)(b) section 3 (fraud by failing to disclose information), and
• s1(2)(c) section 4 (fraud by abuse of position).

Question 2

Fraud by False Representation (s2)

Actus Reus

Answer 2

• S2(2)(a) Fraud Act 2006 – A representation is false** if it is **untrue** or **misleading and
• S2(2)(b) the person making it knows it is, or might be
• S2(3) – A representation means any representation as to fact** or **law** and includes a representation **as to the state of mind of:
  
  • The person making the representation or
  • Any other person
• S2(4) – A representation can be express (words) or implied (by conduct or words)

Question 3

R v King

Fraud by False Representation

State of Mind

Answer 3

​False Representation (s2(1)(a) as to State of Mind (s2(3)

• Used car salesman; placed stickers on odometers saying mileage readers “may not be correct”; he knew they were false (because he had altered them) so held to be a deception as to his state of mind.

Question 4

R v Williams

Fraud by False Representation

Representation can be express or implied (s2(4)

Answer 4

Implied false representation (s2(4)

• Not saying that the Lithuanian money being exchanged at a travel agent’s was obsolete was an implied representation as to a fact i.e. that the currence was valid

Question 5

DPP v Ray

Fraud by False Representation

Representation can be express or implied (s2(4)

Answer 5

• An implied representation (s2(4)) can arise from the defendant’s conduct.
  
  • A person who goes into a restaurant, orders a meal and sits eating a meal is making an implied representation you are going to and can pay for it
  • If they can’t it’s a false representation

Question 6

R v Barnard

Fraud by False Representation

Representation can be express or implied (s2(4)

Answer 6

Implied false representation (2(4)

B went into a shop and bought a book - and he was wearing the clothes of an Oxford Don (which he had stolen) - the clothes alone amounted to a false representation that he was an academic and therefore entitled to the discount that the shop offered to Dons.

Question 7

R v Twaite

Fraud by False Representation

Representation can be express or implied (s2(4))

Answer 7

Mere silence cannot amount to a full representation (s2(4)).

Must be silence accompanied by something.

• RAF officer who applied for married quarters in June 2008 on basis he was getting married on 29^th August 2008. He and fiancée moved into married quarter on 27 August 2008 but didn’t get married until 29^th August 2009. Therefore, charged with fraud by false representation. No evidence he had said anything or made any representations since he moved in. Found guilty of failure to disclose postponement of the marriage. Appeals said decision was wrong as made no representations and his silence didn’t count. Could only convict if thought representations before he moved in were false.

Question 8

False Representation to a machine

s2(5) Fraud Act 2006

Answer 8

• ‘For the purposes of this section a representation may be regarded as made** if it (or anything implying it) is submitted in any form **to any system or device designed to receive, convey or respond to communications (with or without human intervention).’
• NB this is the ONLY offence section that creates an offence of fraud via machines by virtue of S2(5)

Question 9

R v Silverman

Overcharging

Fraud by False Representation

Answer 9

• General Rule – person entitled to charge whatever
• Unless situation of trust and confidence – does one party depend on the other for fair and reasonable conduct?

If so, and the defendant takes dishonest advantage, can be held to be an implied false representation - Watkins LJ

• Silverman had done maintenance work for over 15 years for family of 2 elderly sisters that lived together; took advantage of their reliance– doing work that was unnecessary and charging exorbitant sums.

Question 10

R v Jones

Overcharging

Fraud by False Representation

Answer 10

• Will be a false representation if defendant implies he is charging a fair and reasonable price when knows he isn’t
• Milkman overcharging a corner shop owner for mile over 20 years. Cornershop owner realised his shop was not making a profit because of price of milk.
• Court held there was a relationship of trust and confidence and by taking advantage was a false representation.
• NB – can also be used in s4 if there is a position of trust

Question 11

Fraud by False Representation s2

Mens Rea

Answer 11

1) Knowing that the representation is false or might be: s2(2)(b)​
2) Dishonesty: s2(1)(a)
3) Intention by false rep to make gain for self or another/to cause loss to another/expose another to risk of loss: s2(1)(b)(i) & (ii)

Question 12

Knowing that the representation is false or might be (s2(2)(b)

Mens Rea

False Representation

Answer 12

• S2(2)(b) – the defendant must know, or be aware**, that the statement is **untrue** or **misleading** or **might be
• Knowledge rather than belief - however knowledge to a doubt will be sufficient for a false representation if defendant doesn’t make it clear he is uncertain (R v Staines)

Question 13

R v Staines

Knowing that the representation is false or might be (s2(2)(b)

Mens Rea

False Representation

Answer 13

• Recklessness with regard to a false statement requires more than mere carelessness or negligence**; there **must be an indifference to, or disregard of, whether a statement is true or false.
• A belief, however unreasonable, that the representation is true will prevent the defendant’s conduct amounting to deception.
• If a person knows the statements he is make might be false**, then he should **make that clear to the person he is making it to. If he gives a clear caveat**, then he **does not make a false statement, but a true statement.

Question 14

Ivey v Genting

Dishonesty

Mens Rea

False Representation

Answer 14

• Defendant must make the false representation dishonestly (s2(1)(a)
• Fraud Act doesn’t define dishonesty so apply Ivey v Genting
  
  • what were the facts/ circumstances** as **known by the accused** **at the time?
  • would reasonable decent people** **consider** the **actions dishonest?

Question 15

R v Clarke

Dishonesty

Mens Rea

False Representation

Answer 15

Dishonesty and deception are separate issues

• Parliament had included the element of dishonesty as well as making a false representation
  
  • Telling a lie is not automatically dishonest
  • Clarke was a PI who wrongly told potential clients he had been a member of the fraud squad; was hired on this basis and he defended it by saying that he was a very good investigator.

Question 16

Intention to make a Gain or a Loss (s2(1)(b)(i) and (ii)

Mens Rea

False Representation

Answer 16

Mens Rea False Rep:
Intention by false rep to make gain for self or another/to cause loss to another/expose another to risk of loss: s 2(1)(b)(i) & (ii)

Defined in s 5
Gain/loss in money or other property: s 5(2)(a)
Can be temporary or permanent: s 5(2)(b)
Gain includes keeping what one already has: s 5(3)
Loss includes not getting what one would otherwise get: s 5(4)
Note that intent must be to make gain/cause loss by the representation (R v Gilbert, R v Dziruni)

Question 17

R v Gilbert

Intention to make a Gain or a Loss (s2(1)(b)(i) and (ii)

Mens Rea

False Representation

Answer 17

Intent must be to gain/cause loss by the representation

False representation caused the bank to open a bank account for a company - but the victim was not the bank itself - the bank account was merely the vehicle to pass through the money of a fraudulent transaction.

Gilbert was charged with fraud by false rep even though the account was not directly the way they were getting money -

Causative link between intention of making gain/loss and making of false representation x established.

Question 18

R v Dzriuni

Intention to make a Gain or a Loss (s2(1)(b)(i) and (ii)

Mens Rea

False Representation

Answer 18

Intent must be to make gain/cause loss by the false representation

• – Defendant made a false representation to get a job** and was **going to get money from his work**; therefore, a causative link was established - **amounted to intention to gain money** so was **guilty of fraud

Question 19

Fraud by Failure to Disclose (s.3)

Actus Reus

Answer 19

• Failing to disclose information to another person information when under a legal duty to disclose (s3(a)

Question 20

When does legal duty to disclose arise?

Fraud by Failure to Disclose (s.3)

Actus Reus

Answer 20

• Fraud Act doesn’t define legal duty so refer to para 7.28 Law Commission Report on Fraud
  
  • Statutory duty
  • Transaction of utmost good faith (e.g. insurance)
  • Duty contained in terms of contract
  • Fiduciary relationship
• Judge will define (R v Razoq)

Question 21

Fraud by Failure to Disclose (s.3)

Mens Rea

Answer 21

Dishonesty: s 3(a)
Intention by the failure to disclose to make a gain for self or another/ cause loss to another/expose another to a risk of loss: s 3(b)(i) & (ii)

(you don’t have to know about your legal obligation)

Question 22

Fraud by Abuse of Position s.4

Actus Reus

Answer 22

Defendant must occupy a position requiring him to safeguard or not act against the financial interests of another person: s 4(1)(a)

He must abuse that position: s 4(1)(b)

Question 23

What type of position?

Fraud by Abuse of Position s.4

Actus Reus

Answer 23

• Fraud Act doesn’t define the position so refer to para 7.38 Law Commission Report on Fraud
  
  • trustee and beneficiary,
  • director and company,
  • professional person and client,
  • agent and principal,
  • employee and employer,
  • between partners, e.g. within a family,
• or in the context of voluntary work,
• in any context where the parties are not at arm’s length.
• However, existence of duties is not essential and capable of being ruled on by a judge. (R v Marshall and R v Valujevs)
• R v Silverman and R v Jones apply here - overcharging scenarios

Question 24

R v Marshall

What type of position?

Fraud by Abuse of Position s.4

Actus Reus

Answer 24

Position expected to safeguard / not act against financial interests of another

• Manager of residential home for adults with severe learning difficulties; had control over residents’ bank accounts; withdrew money from bank account of 1 resident and spent on herself and convicted of s4 FA

Question 25

**R v Valujevs** What type of position? Fraud by Abuse of Position s.4 Actus Reus

Answer 25

**Position expected to safeguard / not act against financial interests of another** * Found work for workers and **took responsibility for paying their wages and finding accommodation**. Valujevs had been **taking deductions from their wages** and **charging them inflated rents** for their accommodation. **Trial judge held they were not in a position to safeguard or not act against the financial interests of the workers**. **_Overturned by CoA_**. * **Not limited to fiduciary**, but **must be an obligation _akin to a fiduciary_**. * Inflated accommodation prices were not the wrong; people are allowed to do that * Because they **_assumed responsibility for collecting workers’ wages_, they were in this position and relationship akin to fiduciary** * The judge decides whether position exists – **_objective test_**

Question 26

**R v Pennock** Abuse of Position (**s4(1)(b)** Fraud by Abuse of Position s.4 Actus Reus

Answer 26

**Using incorrectly** or **putting to improper use the position** in a manner **contrary to the expectation arising from that position’** Took advantage of elderly relative with Alzheimers. Bought a house for him with £100k of his money and rest of theirs. Held in their name and then transferred to daughter for tax purposes. Held that they had not abused thier position. House bought for the uncle and he had full control over the bank account.

Question 27

What amounts to abuse under **s4?** Abuse of Position (s4(1)(b) Fraud by Abuse of Position s.4 Actus Reus

Answer 27

**R v Pennock:** Using **incorrectly or putting to improper use the position** in a manner **contrary to the expectation arising from that position** Abuse of position by **positive act** or **omission**: **s 4(2)**

Question 28

Abuse of Position (**s4**) Mens Rea

Answer 28

Dishonesty: **s (4)(1)(b)** Intention by the abuse of position to make a gain for self or another/ cause loss to another/expose another to a risk of loss: **s 4(1)(c)(i) & (ii)**

Question 29

Making Off Without Payment S3 Theft Act 1978 Actus Reus

Answer 29

Making off - **R v McDavitt** Without having paid - **R v Hammond** As required or expected - **Troughton v MPC** For goods and services

Question 30

**R v McDavitt** Making Off Without Payment S3 Theft Act 1978 Actus Reus

Answer 30

* **Requirement is defendant leaves _the place_ at which payment is required.** * Heading for door of restaurant with intention not to pay; told they would call the police and so made payment. He later admitted he intended to walk off without paying, but as he didn’t, charged with attempting to make off without payment.

Question 31

**R v Aziz** Making Off Without Payment S3 Theft Act 1978 Actus Reus

Answer 31

* **on the spot relates to the _time_, not the place at which _the payment would be made_**. * 2 men requested a taxi to take them to a club 13 miles away. On arrival refused to pay. Taxi driver’s controller suggested taking them to the police station. Men ran away. Aziz was caught and convicted under **s3**. Claimed he had not departed from the place he was meant to pay. Court disagreed and payment meant **then and there** * The words “**_on the spot**_” or “_**there and then_**” as the Criminal Law Revision Committee paraphrased them _related to the knowledge which the customer had to have_ of **_when**_ _**payment was to be made_**.’

Question 32

**R v Hammond** Making Off Without Payment S3 Theft Act 1978 Actus Reus

Answer 32

* **All that matters is that some kind of payment has been made, as long as it is valid**, **and the defendant has been _permitted_ to leave**. * Paid with a bounced cheque. Had owner’s permission to depart and so was not found liable of **s3 Theft Act**. * **Smith and Hogan** say this is incorrect and have **criticised the decision**

Question 33

**Troughton v Metropolitan Police Commissioner** Making Off Without Payment S3 Theft Act 1978 Actus Reus

Answer 33

* **Payment is not required, if there has been any _breach of contract_** * Troughton was drunk, but despite this, persuaded a taxi driver to take him home. Forgot where he lived and couldn’t give directions. Driver drove him to police station and he ran off. * Court ruled **_not liable**_ as _**taxi driver was in breach of contract as not taken him to his destination_**

Question 34

Making Off Without Payment S3 Theft Act 1978 Mens Rea

Answer 34

1) **Knowing that payment on the spot is required** from D - **R v Brooks & Brooks** 2) **Dishonesty** - **Ivey v Genting** 3) Intending to avoid payment **permanently** - **R v Allen**

Question 35

**R v Brooks and Brooks** Making Off Without Payment S3 Theft Act 1978 Mens Rea

Answer 35

* **If defendant thinks someone else is going to pay, they don’t think payment is required and expected.** * 3 people went for a meal and each left thinking the other was paying. Conviction quashed

Question 36

**R v Allen** Making Off Without Payment S3 Theft Act 1978 Mens Rea

Answer 36

* it must be proven that the defendant **intends to avoid payment permanently.** * Left a hotel without paying his bill of £1000. Evidence was he intended to pay later after he completed some business transactions. Held, if this was the case, he would not be liable.

Question 38

**Edwards v Ddin** Making Off Without Payment S3 Theft Act 1978 Actus Reus

Answer 38

* **Ownership of _petrol_ passes when it enters the client’s petrol bank** * Therefore, if woman decides she is not going to pay for the petrol BEFORE she puts it in the tank, it is THEFT * If she decides later, it is not theft as the property no longer belongs to another

Question 39

**Corcoran v Whent** Making Off Without Payment S3 Theft Act 1978 Actus Reus

Answer 39

* **Ownership of _food_ passes when it is eaten.** At that point the food ceases to be property. * **Therefore, if a _decision not to pay is taken before eating it, will be theft_** * **If a decision not to pay it taken _after eating, it is technically not theft_** * Whilst **payment may in some cases be expected**, **_if it fails to be legally required**_, it _**may not be legally enforceable_** (this then impacts on Accused intent to dishonestly avoid payment – see below)