Fraud

Question 1

Three different ways to commit frauds

Answer 1

• Fraud by false representation
• Fraud by failure to disclose
• Fraud by abuse of position

Question 2

Sentence for fraud

Answer 2

Maximum: 10 years in prison or an unlimited fine

Question 3

Fraud by false representation

Answer 3

A person is in breach of this section if he:
- Dishonestly makes a false representation; and
- 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 a risk of loss

Question 4

Three aspects of false representation

Answer 4

• Express of implied representation
• Representation as to fact, law or state of mind
• Representation untrue or misleading

Question 5

Express of implied representation

Answer 5

Representation can be made expressly or impliedly.

An implied representation can arise from:

• what the defendant says (eg a second-hand car dealer who stated that the mileage reading on a particular car ‘may not be correct’ impliedly represented that he was not certain the reading was wrong when in fact he knew it was wrong because he altered it
• defendant’s conduct - the court held that the respondent made a continuing implied representation when entering a restaurant, ordering and eating that he had the means and intention of paying for it (case where failed driving test 15 times and had someone sit it for him, person who sat it made the representation but acted as defendant’s agent)

Note: pure silence without an accompanying action cannot amount to a representation

Question 6

Representation as to fact, law or state of mind

Answer 6

Representation as to fact or law is relatively straightforward.

Representation as to state of mind is more complicated. Will be fraud if it can be shown that the defendant does not in fact hold that opinion or belief.

• impliedly states facts which form opinion
• intention: stating an intention to do something when having no intention may amount to a false representation e.g. implied would pay for meal before leaving the restaurant.

Question 7

Representation untrue or misleading

Answer 7

Untruth is usually an issue of fact for the jury but unclear what misleading adds.

Question 8

Overcharging

Answer 8

Criminal law in some circumstances will impose liability for overcharging.

Sometimes possible to charge defendant in a similar situation with fraud by abuse of position but it is more straightforward to establish liability on the grounds that there was an implied representation that the charge was fair.

• Case where builder worked on home of elderly sister for years and on multiple occasions overcharged them - seems to imply victim must be in some way vulnerable.
• Friend overcharged the other for milk crates - found that it was fraud bc it was a long time trusted friend and other felt he didn’t need to check

Question 9

Deceiving a machine

Answer 9

Fraud if you withdraw money from machine or shop online with stolen credit cards.

Question 10

Fraud by false representation: mens rea

Answer 10

Three aspects:
- Dishonesty
- Mens rea for the false statement
- intention to make a gain or cause a loss

Question 11

Fraud by false representation: dishonesty

Answer 11

Ivey test:

(i) What was the defendant’s knowledge and belief as to the facts?
(ii) Given that knowledge and belief was the defendant dishonest by the standards of ordinary decent people?

Note: this is separate from deception

Question 12

Fraud by false representation: false statement

Answer 12

Defendant must know or be aware that the statement they are saying is untrue or misleading

Will be satisfied if D is subjectively aware of the possibility that what they are saying or implying is false.

Can be reckless but must be more than negligence or carelessness - must be an indifference to or disregard to the truth. (a clear caveat will exempt them)

Question 13

Fraud by false representation: intention to make a gain or cause a loss

Answer 13

• intends to make a gain for themselves;
• intends to make a gain for someone else;
• intends to cause a loss to another; or
• exposes someone to a risk of loss

False rep to get a job could be regarded as intention to make a gain in terms of money.

Gain and loss:
- extends only to gain or loss in money or other property;
- includes any such gain or loss whether temporary or permanent; property means real or person
- gain includes keeping what one has (and getting what one doesn’t have)
- Loss includes a loss by not getting what one might get as well as a loss by parting with what one has

Question 14

Fraud by failure to disclose

Answer 14

Actus reus:
- existence of a legal duty; and
- failure to disclose

Mens rea:
- Intends by failing to disclose the information to make a gain for himself or another or to cause loss to another or to expose another to a risk of loss

Question 15

AR: existence of a legal duty to disclose

Answer 15

• arising from statute
• within a transaction of the utmost good faith (insurance)
• contained in the express of implied terms of a contract
• arising from a custom in a particular trade or market
• arising from a fiduciary relationship

eg. failing to disclose disciplinary proceedings against him, failing to disclose change in financial circumstances for benefits

Question 16

AR: failure to disclose

Answer 16

Prosecution must prove that the defendant failed to disclose the information to another person. This will be a matter of fact.

Question 17

MR: failure to disclose

Answer 17

1. Dishonesty, ivey test:
   What was the defendant’s knowledge and belief as to the facts?
   Given that knowledge and those beliefs, was the defendant dishonest by the standards of ordinary decent people?
2. Intention to make a gain/loss
   - extends only to gain or loss in money or other property;
   - includes any such gain or loss whether temporary or permanent; property means real or person
   - gain includes keeping what one has (and getting what one doesn’t have)
   - Loss includes a loss by not getting what one might get as well as a loss by parting with what one has

Question 18

Fraud by abuse of position

Answer 18

• Occupies a position in which he is expected to safeguard or not to act against the financial interests of another person
• dishonestly abuses that person
• 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 a risk of loss

Question 19

Examples of positions (law commission)

Answer 19

• trustee and beneficiary
• director and company
• professional person and client
• agent and principal
• employee and employer
• between partners

Can arise within family or in the context of voluntary work or in any context where the parties are not at arms length

Question 20

Actus reus: occupying position

Answer 20

Matter that will be determined on a case-by-case basis.

e.g. manager of a residential home for adults with disabilities who had control over residents’ bank accounts spent the money on herself - was convicted of fraud.

gang masters in charge of group of foreign workers - found them work and paid wages and found homes, deducted from their wages and overcharged rent - judge held because they were responsible for collecting the workers wages they has assumed responsibility to safe guard their interests

It is for the judge to assess whether the position held by the individual is capable of being one in which he is expected to safeguard or not to act against the financial interests of another person (objectively) - if so capable it will be for the jury to determine whether or not they are sure that was the case.

Question 21

Actus reus: abuse of position

Answer 21

Once the prosecution have shown that the defendant occupied a position requiring D to safeguard the position of the victim of the fraud. They must then prove that the position has been abused.

COA: ‘uses incorrectly’ or ‘puts to improper use’ the position held in a manner that is contrary to the expectation that arises because of that position.
seems to suggest illegal = improper
No abuse of position bc Mr Spann had retained equitable interest in the house (although may have been if they had successfully deprived him of it)

Can also be committed by omission (eg employee failing to collect payment on behalf of their employer)

Question 22

MR: fraud by abuse of position

Answer 22

MR:
- dishonesty
- intention to make a gain or cause a loss

Dishonesty test (Ivey):
What was the defendant’s knowledge and belief as to the facts? Given that knowledge and those beliefs, was the defendant dishonest by the standards of ordinary decent people?

There can be oblique intention - if an employee is too lazy to collect a payment on behalf of their employer it is virtually certain that such a loss would be caused and the defendant appreciated it.