Fraud Flashcards
S1 Fraud Act 2006
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).
Fraud by False Representation (s2)
Actus Reus
- 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)
R v King
Fraud by False Representation
State of Mind
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.
R v Williams
Fraud by False Representation
Representation can be express or implied (s2(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
DPP v Ray
Fraud by False Representation
Representation can be express or implied (s2(4)
-
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
R v Barnard
Fraud by False Representation
Representation can be express or implied (s2(4)
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.
R v Twaite
Fraud by False Representation
Representation can be express or implied (s2(4))
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 29th August 2008. He and fiancée moved into married quarter on 27 August 2008 but didn’t get married until 29th 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.
False Representation to a machine
s2(5) Fraud Act 2006
- ‘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)
R v Silverman
Overcharging
Fraud by False Representation
- 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.
R v Jones
Overcharging
Fraud by False Representation
- 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
Fraud by False Representation s2
Mens Rea
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)
Knowing that the representation is false or might be (s2(2)(b)
Mens Rea
False Representation
- 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)
R v Staines
Knowing that the representation is false or might be (s2(2)(b)
Mens Rea
False Representation
- 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.
Ivey v Genting
Dishonesty
Mens Rea
False Representation
- 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?
R v Clarke
Dishonesty
Mens Rea
False Representation
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.
Intention to make a Gain or a Loss (s2(1)(b)(i) and (ii)
Mens Rea
False Representation
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)
R v Gilbert
Intention to make a Gain or a Loss (s2(1)(b)(i) and (ii)
Mens Rea
False Representation
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.
R v Dzriuni
Intention to make a Gain or a Loss (s2(1)(b)(i) and (ii)
Mens Rea
False Representation
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
Fraud by Failure to Disclose (s.3)
Actus Reus
- Failing to disclose information to another person information when under a legal duty to disclose (s3(a)
When does legal duty to disclose arise?
Fraud by Failure to Disclose (s.3)
Actus Reus
-
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)
Fraud by Failure to Disclose (s.3)
Mens Rea
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)
Fraud by Abuse of Position s.4
Actus Reus
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)
What type of position?
Fraud by Abuse of Position s.4
Actus Reus
-
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
R v Marshall
What type of position?
Fraud by Abuse of Position s.4
Actus Reus
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
R v Valujevs
What type of position?
Fraud by Abuse of Position s.4
Actus Reus
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
R v Pennock
Abuse of Position (s4(1)(b)
Fraud by Abuse of Position s.4
Actus Reus
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.
What amounts to abuse under s4?
Abuse of Position (s4(1)(b)
Fraud by Abuse of Position s.4
Actus Reus
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)
Abuse of Position (s4)
Mens Rea
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)
Making Off Without Payment
S3 Theft Act 1978
Actus Reus
Making off - R v McDavitt
Without having paid - R v Hammond
As required or expected - Troughton v MPC
For goods and services
R v McDavitt
Making Off Without Payment
S3 Theft Act 1978
Actus Reus
-
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.
R v Aziz
Making Off Without Payment
S3 Theft Act 1978
Actus Reus
-
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.’
R v Hammond
Making Off Without Payment
S3 Theft Act 1978
Actus Reus
-
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
Troughton v Metropolitan Police Commissioner
Making Off Without Payment
S3 Theft Act 1978
Actus Reus
-
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
Making Off Without Payment
S3 Theft Act 1978
Mens Rea
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
R v Brooks and Brooks
Making Off Without Payment
S3 Theft Act 1978
Mens Rea
-
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
R v Allen
Making Off Without Payment
S3 Theft Act 1978
Mens Rea
- 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.
Edwards v Ddin
Making Off Without Payment
S3 Theft Act 1978
Actus Reus
-
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
Corcoran v Whent
Making Off Without Payment
S3 Theft Act 1978
Actus Reus
-
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)
