Chapter 21: Fraud

Question 1

What is the Act that provides the offences for Fraud?

Answer 1

Fraud Act 2006

Question 2

What are the 4 types of fraud?

Answer 2

• Section 2 - fraud by false misrepresentation
• Section 3 - fraud by failing to disclose information
• Section 4 - fraud by abuse of position
• Section 11 - obtaining services dishonestly

Question 3

What is the overview for Section 2 - Fraud by flase representation?

Answer 3

• Specific intent crime (only focuses on intent)
• No statutory definition
• Maximum 10 years imprisonment

Question 4

What are the 4 elements for Section 2

Answer 4

Actus reus

1. Makes
2. A false representation

Mens rea

1. Dishonestly
2. Intends to make a gain; or
   Intends to cause loss to another or to expose another to a risk of loss

Question 5

What is there to note about the ‘makes’ element?

Answer 5

• AR and MR have to coincide (present tense)
• Needs to be exactly at the time of the offence (however, doesn’t link to the MR)

Question 6

What is the definition of a flase representation?

What section provides the definition and the list of flase representations available?

Answer 6

Definition - Section 2(2) (half truth)

A false representation is false if -

1. It is untrue or misleading, and
2. the person making it knows that it is, or might be, untrue or misleading

1) Section 2(3)

• “Representation” means any representation as to fact or law, including a representation as to the state of mind of -
  1. the person making the representation, or
  2. any other person.

2) Section 2(4)

• A representation may be expressed or implied

3) Section 2(5)

• Fraud can be committed by machine

Question 7

What is there to note about Section 2 mens rea?

Answer 7

• Specifically for MR, it is an ulterior intent crime
• No need for actual loss/gain – just look at intent

Question 8

What is there to note about the dishonesty element for Section 2?

Answer 8

• Must tell the examiner that there is no statutory definition for the word “dishonesty”
• Also mention that dishonesty definition cannot be borrowed from Section 2 Theft Act even though similar (as it talks about different offences)
• Thus, need to go for common law, which was given in the case of Ivey v Genting Casinos
  1. Reasonable man (objective test)

Question 8

What secion provides the definition for money and property for -

‘Intends to make a gain; or Intends to cause loss to another or to expose another to a risk of loss’?

Answer 8

Scope

• Provided by Section 5, a gain/loss in money or other property
• Can be temporary or permanent

Definition

• “Property” - real or personal (things in action or intangible property)
• “Gain” - keeping what one has and what one does not have
• “Loss” - includes loss that was parted with, and loss that was supposed to get but didn’t due to the representation

Question 9

What is the overview for Section 3 - fraud by failing to disclose information?

Answer 9

Overview

1. Ulterior intent (only need intent for liability)
2. Conviction on indictment – 10 years imprisonment

Question 9

What are the 3 elements for Section 3 - fraud by failing to disclose infromation?

Answer 9

Actus reus

1. Fails to disclose to another person information which he is under a legal duty to disclose

Mens Rea

1. Dishonestly
2. intends, by failing to disclose information to make a gain; or
   to cause loss to another or to expose another to a risk of loss.

Question 10

What is ‘Fails to disclose to another person information which he is under a legal duty to disclose’?

Does the Fraud Act 2006 provide the scope of “legal duty”? Where can it be found?

Answer 10

Introduction

• This is only a negative act
  And only for those with a legal duty (if no duty then not liable)

Note

• There is no provision to disclose what is a “legal duty”
• Thus, can interpret from the Hansard – paragraph 7.28 & 7.29 of the HC Research Paper 6/31

5 duties from Hansard

1. Statute
2. Transactions that are considered as one of utmost good faith
3. Express or implied terms of the contract
4. Custom of a particular trade or market
5. Existence of fiduciary relationship

Question 11

What is there to note about mens rea for Section 3?

Answer 11

• Also an ulterior intent for MR – only need the intent
• No need actual gain/loss

Question 12

What is there to note about ‘dishonestly’ element for Section 3?

Answer 12

• Must tell the examiner that there is no statutory definition for the word “dishonesty”
• Also mention that dishonesty definition cannot be borrowed from Section 2 Theft Act even though similar (as it talks about different offences)
• Thus, need to go for common law, which was given in the case of Ivey v Genting Casinos
  1. Reasonable man (objective test)

Question 13

What is ‘intends, by failing to disclose information to make a gain; or to cause loss to another or to expose another to a risk of loss.’ for section 3?

What is there to note about this element?

Answer 13

Scope

• Provided by Section 5, a gain/loss in money or other property
• Can be temporary or permanent

Note

• includes loss that was parted with, and loss that was supposed to get but didn’t due to the representation

Same as Section 2

Question 14

What is the overview for Section 4 - Fraud by use of position?

Answer 14

• Ulterior intent crime (no need actual loss)
• Conviction on indictment (crown court) – 10 years imprisonment

Question 15

What is there to note about the whole of Section 4?

Answer 15

This provision is quite a mess, it is described as ‘woolly’ (vague) and a ‘catch all provision that will be a nightmare of judicial interpretation…. And help bring the law into disrepute.’ – Standing Committee B

Question 16

What are the 4 elements for Section 4?

Answer 16

Actus reus

1. Occupies a position in which he is expected to safeguard; or
2. Not to act against, the financial interest of another person

Mens rea

1. Dishonestly abuses that position; and
2. Intends, by means of the abuse of that position to make a gain for himself or another; or
   to cause loss to another or to expose another to a risk of loss

Question 17

Does Fraud Act 2006 provide definition for “position” for – occupies a position in which he is expected to safeguard?

If not, where can it be found?

Answer 17

Introduction

• There is no definition for the word “position”
• Thus, look at Hansard – paragraph 7.38 of the Law Commissions No. 276

Hansard

“The necessary relationship will be present between trustee and beneficiary, director and company, professional person and client, agent and principal, employee and employer, or between partners. It may arise otherwise, for example within a family, or in the context of voluntary work, or in any context where the parties are not at arm’s length.”

1. Trustee & beneficiary (trust law)
2. Director & company (company law)
3. Professional person & client (every profession)
4. Agent & principal
5. Employee & employer, or between partners
6. Family
7. Voluntary work
8. Parties are not at arm’s length

Question 18

What is there to note about ‘Dishonestly abuses that position’ in Section 4?

Answer 18

• Must tell the examiner that there is no statutory definition for the word “dishonesty”
• Also mention that dishonesty definition cannot be borrowed from Section 2 Theft Act even though similar (as it talks about different offences)
• Thus, need to go for common law, which was given in the case of Ivey v Genting Casinos
  1. Reasonable man (objective test)

Same with all dishonestly in Fraud Act 2009

Question 19

What is there to note about ‘Intends, by means of the abuse of that position to make a gain for himself or another; or
to cause loss to another or to expose another to a risk of loss’ in Section 4?

Answer 19

Scope

• Provided by Section 5, a gain/loss in money or other property
• Can be temporary or permanent

Note

• No need to prove actual loss, as long as there is intention at the time of the action
• At the time of conduct

Question 20

What is the overview for Section 11 - obtaining services dishonestly?

Answer 20

Triable either way offence

• Summary conviction – 12 months imprisonment or fine (or both)
• Indictable offence – 5 years imprisonment or fine (or both)

Crime

• Result crime

Burden of proof

• Prosecution to disproof beyond reasonable doubt (Woolmington v DPP by Viscount Sankey)

Question 21

How does Section 11 apply?

Answer 21

Introduction

• Only applies where actually obtained something (others only need MR)
• Only applies for services

Note

• Keep in mind Section 3 Theft Act 1978 - making off without payment
• Theft Act can apply for services & goods

Question 22

What are the 3 elements for Section 11?

Answer 22

Actus reus

1. Obtains services for himself or another by dishonest act, and breach of subsection (2)

Mens rea

1. Dishonest
2. When he obtains them, he knows that they are being made available on the basis described in paragraph (a), or that they might be, but intends that payment will not be made, or will not be made in full

Question 23

What are the 3 conditions that are provided under **Section 11(2)** for - 'Obtains services for himself or another by dishonest act, and breach of **subsection (2)**'

Answer 23

**Section 11(2)** a) Obtains services if they are made available on the basis that **payment** has been, is being or will be made for or in respect of them * Services have anything to do with payment b) obtains them **without any payment** having been made for or respect of them or without payment having been made **in full**, * Payment not done at all * Payment not made in full sum c) when he **obtains** them, he **knows** that they are being made available on the basis described in paragraph (a), or that they might be, but intends that payment will not be made, or will not be made in full

Question 24

What is there to note about the 'dishonest' element for **Section 11?**

Answer 24

* Must tell the examiner that there is **no statutory definition** for the word “dishonesty” * Also mention that dishonesty definition cannot be borrowed from **Section 2 Theft Act** even though similar (as it talks about different offences) * Thus, need to go for common law, which was given in the case of **Ivey v Genting Casinos** 1. Reasonable man (objective test)