Law-Fraud And Making Off Without Payment

Question 1

What is the current law on fraud?

Answer 1

The Fraud Act 2006. The previous law on fraud and deception was thought to be in need of a complete reform-as a result the Fraud Act 2006 was enacted, which replaced ss15, 15A, 15B, 16 and 20(2) of the Theft Act 1968, and also ss1 and 2 of the Theft Act 1978. These previous offences are replaced with an offence of fraud which can be committed in three different ways. The main way is fraud by false reresentation (s2), the other offences are obtaining services dishonestly (s11) and making off without payment

Question 2

What is the law on fraud by false representation?

Answer 2

Under s2 of the Fraud Act 2006, this offence is committed if the defendant: “(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 the risk of loss.”

Question 3

What are the actus reus elements for fraud by false representation?

Answer 3

Representation, false and gain or loss

Question 4

What are the mens rea elements for fraud by false representation?

Answer 4

Dishonest, know or believe the representation to be untrue or misleading, and, have an intention to make a gain or cause a loss

Question 5

How does the Fraud Act 2006 explain ‘representation’?

Answer 5

Section 2(3) states that “‘representation’ means any representation as to fact or law, including making a representation as to the state of mind of-(a) the person making the representation, or (b) any other person”

Question 6

What is a representation as to fact?

Answer 6

It covers situations where someone uses a false identity or states that they own property when they do not. It also covers situations such as someone stating that a car has only done 22,000 miles when they know it has done more

Question 7

What is a representation as to law?

Answer 7

It covers any situation where the defendant states the law knowing that what they say is not true

Question 8

What is a representation as to state of mind?

Answer 8

It covers such matters as a customer saying they will pay their bill when they have no intention to do so

Question 9

What type of representation is talked about under s2(5)?

Answer 9

Representation by machines eg internet, automated systems (ATMs). “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 communication (with or without human intervention”

Question 10

What types of representation are discussed under section 2(4)?

Answer 10

Express or implied representations

Question 11

What is express representation?

Answer 11

The explanatory notes to the Fraud Act make it clear that there is no limit on the way in which the representation must be expressed. The notes point out that it could, for example, be written, spoken or posted on a website. A written statement includes where the defendant provides a false reference

Question 12

What case is an example of express representation?

Answer 12

Silverman-Defendant gave excessive quote to two elderly sisters for work to be done on their flat. He had done work for them previously and built up a situation of ‘mutual trust’. By giving an exorbitant quotation, he was deceiving them as to the true cost of the repairs and amount of profit he was making. The court of appeal accepted this could be deception, although they quashed his conviction because of inadequate summing up to the jury

Question 13

What is a recent case example of express representation?

Answer 13

Hamilton-victim’s son bought some new fence panels for victim’s garden, but as they were the wrong size he left them leaning against the side of the house until he could replace them. Defendant and brother called at victim’s house claiming they had come to collect payment for the panels. In fact the victim’s sone had already paid for them in full. Defendant told victim that once sum was paid they would arrange for replacement panels to be delivered. Victim paid them £60. Defendants found guilty under s2 of the Fraud Act 2006

Question 14

What do the explanatory notes of the Fraud Act also point out?

Answer 14

The offence can be committed by ‘phishing’ on the internet. This is where a person sends out an email to a large number of people falsely representing that the email has been sent from a bank. The email asks for information such as credit card numbers so they can access other assets

Question 15

What is implied representation?

Answer 15

There are many ways in which it is possible to make an implied representation through one’s conduct, an example is in the case of Barnard

Question 16

What happened in the case of Barnard?

Answer 16

Defendant went into a shop in Oxford wearing a cap and gown of a fellow commoner of the university and said that was what he was. The shopkeeper then agree to sell him goods on credit. The court said, obiter, that he would have been guilty even if he had said nothing. The wearing of the cap and gown was itself a false representation (implied representation)

Question 17

What would a modern example of implied representation be?

Answer 17

An example could be a person holding a charity box which reads “guide dogs for the blind” when they actually intended on keeping the money

Question 18

What is a case for implied representation under the old law?

Answer 18

Lambie-Defendant had a credit card with £200 limit. She exceeded this limit and the bank which has issued the card wrote asking her to return the card. She agreed that she would return it on the 7th December but did not, and made another purchase on the card on the 15th December. She was convicted of obtaining a pecuniary advantage by deception contrary to s16(1) of the Theft Act 1968

Question 19

What was held in the case of Lambie?

Answer 19

The court of appeal allowed her appeal but the House of Lords reinstated her conviction. It was likely that the decision in this case would be upheld under the new Fraud Act 2006 as in explanatory notes it is stated that: “An example of a representation by conduct is where a person dishonestly misuses a credit card to pay for items. By tendering the card, he is falsely representing the he has authority to use it”

Question 20

Under the old law, what other situations of implied representation were identified?

Answer 20

Ordering and eating a meal in a restaurant-representation that the meal will be paid for (Dpp v Ray), paying by cheque-representation that the bank will honour the cheque (Gilmartin), use of a cheque guarantee card-represents that the bank will meet any cheque on the limit of the card (Metropolitan Police Commander v Charles)

Question 21

Although these cases of implied representation are under the old law, why are they still relevant?

Answer 21

The case of Lambie demonstrates that new legislation may apply previous rulings under the old legislation, therefore the four other examples may be applied to current cases

Question 22

How does the Fraud Act 2006 explain ‘false’?

Answer 22

For the purposes of the Act, a representation is false if: “(a) it is untrue or misleading, and (b) the person making it knows that it is, or might be untrue or misleading”

Question 23

What does ‘misleading’ mean, when defining ‘false;?

Answer 23

It is not defined by the Act, but the Government in their paper ‘Fraud law: Government response to consultation’, stated that a representation was misleading if it was: “less than wholly true and capable of interpretation to the detriment of the victim”

Question 24

What is the ‘gain or loss’ element of fraud by false representation?

Answer 24

This offence requires that the defendant intends to make a gain for himself or another, or to cause a loss to another, or to expose another to the risk of loss. Both ‘gain’ and ‘loss’ mean gain or loss in money or other property

Question 25

What is property for the purpose of fraud by false representation?

Answer 25

It is defined in s5 of the Fraud Act 2006 as: “Any property whether real or personal including things in action and other intangible property”

Question 26

What does gain, and loss involve?

Answer 26

Gain includes a gain by keeping what one has as well as gain by getting what one does not have. Loss includes a loss by parting with what one has. The gain or loss can be temporary or permanent

Question 27

What case demonstrates gain or loss?

Answer 27

Kapitene-defendant was an illegal immigrant and applied for a job at a cleaning service. He signed a declaration stating he was legally entitled to remain in the UK. He showed then a Congolese passport containing his details, photograph and immigration stamp indicating he had ‘indefinite leave’ to remain in the UK, and began work as a cleaner. Defendant’s gain was his wages as he was paid by the cleaning service, and the victim’s loss was the wages paid out

Question 28

What is the dishonesty element of fraud by false representation?

Answer 28

The explanatory notes issued by the Government with the Act make it clear that the Ghosh test for dishonesty, used in theft cases, applies to this offence: 1)whether defendants behaviour would be regarded as dishonest by the ordinary standards of reasonable/honest people, 2)whether defendant was aware that his conduct was dishonest by reasonable and honest people

Question 29

What is the ‘know or believe the representation to be untrue’ element of fraud by false representation?

Answer 29

To be guilty the defendant must know that the representation he pr she is making, is or might be, untrue or misleading. This is a subjective test as it focuses on what the defendant knew

Question 30

What is the intention to make gain or cause a loss element of fraud by false representation?

Answer 30

It is not necessary for the fraud to succeed, it is only necessary for the defendant to intend to make a gain or cause a loss. Under the old law, the prosecution had to prove that the deception had cause the obtaining of property, which led to problems in many cases, such as Laverty. Under the new offence, this is not necessary. All the prosecution has to prove is that the defendant intended to make a gain from his act-and would not matter if victim became suspicious or anything like that eg call police

Question 31

What is obtaining services dishonestly?

Answer 31

“S11(1) a persons is guilty of an offence under this section if he obtains services for himself or another-(a)by a dishonest act, and (b)in breach of subsection (2). 11(2) a person obtains services in breach of this subsection if (a) they are made available on the basis that payment has been made (or will be) for or in respect of them; (b) he obtains them without any payment having been made for or in respect of them or without payment having been made in full, and (c) when he obtains them he knows- (i) that they are being made available on the basis of described in paragraph (a) or (ii) that they might be, but intends that payment will not be made or will not be made in full”

Question 32

What are the actus reus elements of obtaining services dishonestly?

Answer 32

Must be an act (no omission), obtains, services, not paid for or not paid in full

Question 33

What are the mens rea elements of obtaining services dishonestly?

Answer 33

Dishonesty, knowledge the services are/might be available on basis payment has will/be paid, intention not pay or not to pay in full

Question 34

What is the ‘obtains’ element for obtaining services dishonestly?

Answer 34

The offence requires that the services are actually obtained. This is unlike the offence of fraud by false representation where it was not necessary for anything to be obtained. The making of the false representation intending to make a gain or cause a loss was sufficient

Question 35

How is ‘services’ explained in terms of obtaining services dishonestly?

Answer 35

It is not defined in the Act, but the explanatory notes to the Act provide example of situations where the services are obtained; using false credit card details to obtain services on the intent, climbing over a wall and watching a football match without paying the entry fee

Question 36

What are other situations which would be classed as obtaining services dishonestly?

Answer 36

Using a false bus pass to get a free or reduced price journey, claiming falsely to be under 14 in order to have cheaper admission to see a film in a cinema, using a stolen decoder card to receive satellite television programmes

Question 37

Is it necessary to show that the defendant has deceived anyone?

Answer 37

The defendant only has to obtain the services dishonestly, it is not necessary to show that he has deceived anyone. This is shown by the example of climbing over a wall to watch a football match without paying for entry. The defendant has not shown any false ticket or deceived anyone, but he is still guilty of the offence of obtaining services dishonestly

Question 38

What is the ‘not paid for’ element of obtaining services dishonestly?

Answer 38

The offence is only committee if the defendant does not pay anything or does not pay in full for the service. Even if the defendant has made a false statement, but pays in full for the service, then he has not committed the offence of obtaining services dishonestly

Question 39

What is the ‘dishonestly’ element of obtaining services dishonestly?

Answer 39

This is not defined in the Act, nor is there any mention of it in the explanatory notes of the Act. This is different o fraud by false representation which states; the Ghosh test should be applied for dishonestly. This makes it difficult to know whether this test will be applied by the courts. However it seems likely that it will

Question 40

What is the ‘knowledge’ element of obtaining services dishonestly?

Answer 40

The defendant must know that the services, or might be, available only on the basis that payment has been or will be made for them

Question 41

What is the ‘intention not to pay’ element of obtaining services dishonestly?

Answer 41

The prosecution must prove that the defendant intended not to pay or not pay in full for services. If the defendant thought that someone else had already paid then he would not be guilty of this offence

Question 42

Why was the offence making off without payment created?

Answer 42

It was created when it became obvious that the Theft Act 1968 left gaps in the law where the defendant was being found not guilty of any offence, even though his conduct would be seen as ‘criminal’ by most people-one of the gaps became apparent in the case of Greenburg

Question 43

What happened in the case of Greenburg?

Answer 43

Defendant filled car up at a garage then drove off without paying. He was not guilty of theft because at the moment he appropriated the petrol it belonged to him. It was also not possible to prove an offence of obtaining petrol by false pretences because he claimed he had driven into the garage intending to pay and so made no deception about his conduct. He only decided not to pay once he had filled the tank

Question 44

What piece of law now covers situations such as in the case of Greenburg?

Answer 44

Section 3(1) of the Theft Act 1978; “A person who, knowing that payment on the spot for any goods supplied or service 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 due shall be guilty of an offence”

Question 45

What is a requirement of the goods/services for making off without payment?

Answer 45

The goods supplied or services done must be lawful. If the supply of goods is unlawful eg selling cigarettes to someone underage or the service is not legally enforceable eg prostitution, then no offence has been committed

Question 46

What are the actus reus elements of making off without payment?

Answer 46

Makes off, goods have been supplied or service done, payment required on the spot, and defendant has not paid

Question 47

What is the ‘makes off’ element of making off without payment?

Answer 47

This is a key part of the offence and is where the defendant leaves the scene where payment was expected. A case for this is McDavitt

Question 48

What happened in the case of McDavitt?

Answer 48

Defendant had an argument with the manager of a restaurant and refused to pay his bill for a meal. He got up and started to walk out but was advised not to leave as the police had been called. He then went into the toilet and stayed there until police came. The judge directed the jury to acquit the defendant at the end of the prosecution case as he had not ‘made off’

Question 49

What is the ‘goods have been supplied or a service’ element of making off without payment?

Answer 49

If the service is not completed then there is no offence, such as in the case of Troughton v Metropolitan Police

Question 50

What happened in the case of Troughton v Metropolitan Police?

Answer 50

Defendant was drunk and hired a taxi to take him home but didn’t give the driver his address. Driver stopped to get directions from defendant and there was an argument in which defendant accused driver of taking unnecessary diversion. As driver couldn’t get exact address he drove him to nearest police station to see if someone could help, but defendant ran off

Question 51

What was held in the case of Troughton v Metropolitan Police?

Answer 51

Magistrates convicted defendant but, on appeal to QBD court, the conviction was quashed. This was because the journey had not been completed. This meant there was a breach of contract by the taxi driver so the defendant was not bound to pay the fare

Question 52

What is the ‘payment required on the spot’ element of making off without payment?

Answer 52

It has to be proved that payment on the spot was required or expected. If it is not then the offence has not been committed

Question 53

What is a case for payment required on the spot?

Answer 53

Vincent-Defendant stayed at two hotels and not paid the bills. He said he arranged with proprietors of each hotel to pay when he could. This meant payment on the spot was not required or expected. At rial, judge directed jury that defendant couldn’t rely on a dishonestly obtained agreement to avoid payment. Conviction quashed as s3 merely states payment on spot must be required or expected. If there had been an agreement not to expect payment on spot it was irrelevant for purposes of s3 that the agreement had been dishonestly obtained

Question 54

What is the ‘defendant has not paid’ element of making off without payment?

Answer 54

This is a matter of fact; the payment must be of the amount due

Question 55

What are the mens rea elements for making off without payment?

Answer 55

Dishonestly, knowledge that payment on the spot is required, and intention to avoid payment

Question 56

What is the dishonestly element of making off without payment?

Answer 56

The test for dishonesty is the same as for theft, meaning the Ghosh two part test applies

Question 57

What is the ‘knowledge that payment on the spot is required’ element of making off without payment?

Answer 57

If the defendant does not know that payment is required on the spot, then he is not guilty of this offence

Question 58

What is the ‘intention to avoid payment’ element of making off without payment?

Answer 58

The Act only states, ‘with intent to avoid payment of the amount due’ but in Allen, the House of Lords held that there must be an intent permanently to avoid payment. Allen’s conviction was quashed as it had not been proved that he intended to evade payment altogether