用戶:Hinnia/Fraud

Fraud – Structure and Common Elements

Fraud Act 2006, s 1

Section 1:

• A person is guilty of fraud if they are in breach of any of the following:
  • s 2 – fraud by false representation
  • s 3 – fraud by failing to disclose information
  • s 4 – fraud by abuse of position

Maximum sentence for fraud (any variant):

• On indictment: up to 10 years’ imprisonment or a fine (or both).
• On summary conviction: up to 12 months or a fine (or both).

Empirical context from the handout:

• Crime Survey for England and Wales (year ending June 2019): approx 3.86 million fraud offences against adults.
• 2012–13 ONS figures:
  • Approx 58,000 cases under s 2
  • Approx 200 cases under s 3
  • Approx 1,000 cases under s 4

Section 1 establishes a single offence of fraud, committed by three alternative modes.

Common elements in all three fraud variants (ss 2–4.)

Two core mental elements that are common to all three types of fraud:

1. Dishonesty
   • Defined according to Ivey v Genting, as adopted in Barton & Booth (see theft/dishonesty notes).
   • Unlike theft, there is no equivalent of Theft Act s 2 in the Fraud Act, so there are no statutory “safe harbours”: everything turns on Ivey‑style dishonesty.
2. Intention to make a gain or cause loss / risk of loss
   • Each fraud offence requires that D intends, by the relevant conduct (misrepresentation, failure to disclose, abuse of position):
     • To make a gain for themselves or another; or
     • To cause loss to another; or
     • To expose another to a risk of loss.

This intention is central to how fraud differs from the old law of deception.

“Actual causation” vs “intended causation”

Old offence: obtaining property by deception

• Required:
  • Property to be obtained, and
  • The property to be obtained “by deception” (actual causation between deception and obtaining).

New law: fraud (ss 2–4)

• Property need not be obtained at all.
• No one need actually be deceived.
• However:
  • There must be an intention to make a gain / cause loss by:
    • Making the representation (s 2); or
    • Failing to disclose (s 3); or
    • Abusing the position (s 4).

This is described in the handout as “causation in the head”.

Illustrations:

• Example – O’Leary EWCA Crim 1371
  • D falsely tells an elderly woman with dementia: “As we agreed, I did some work on your roof two months ago. Can I trouble you for payment?”
  • D aims to secure payment by means of this lie.
  • Fraud is complete even if she never pays: the key is D’s intention to gain by the misrepresentation.

Two thought‑experiments:

1. Intended causation present
   • D lies on parts of a loan form, believing those answers will be seen by the decision‑maker and affect the decision.
   • Even if, in reality, those answers are only for market research and not used by the lender, there is still fraud:
     • D intended to gain the loan by means of the lies.
2. Intended causation absent
   • D believes (wrongly) that questions on the last page are only for market research and will not be seen by the decision‑maker.
   • Lies on those questions.
   • In fact, the lender does look at those answers and grants the loan on the strength of them.
   • No fraud – D had no intention to gain by those particular lies, even though they in fact caused the decision.

Case confirming importance of intended causation:

• Gilbert EWCA Crim 2392
  • Company director falsely stated that the company was backed by family money to persuade a bank to open an account.
  • Convicted of fraud by false representation.
  • Court of Appeal quashed the conviction:
    • Jury should have been directed that she must be shown to have intended to make a gain by that misrepresentation.
    • Suggested any later profits from using the bank account might be too remote from the lie.

Key exam point: For all three fraud variants, always ask:

• What exact gain/loss did D intend?
• Did D intend to achieve that result by the misrepresentation / non‑disclosure / abuse?

“Gain” and “Loss” – Fraud Act 2006, s 5

Section 5 applies to ss 2–4.

What can count as gain or loss?

s 5(2):

• “Gain” and “loss”:
  • Extend only to gain or loss in money or other property.
  • Include such gain or loss whether temporary or permanent.

“Property” here:

• Any property, whether real or personal, including things in action and other intangible property.

Contrasts with theft:

• In theft, the scope of “property” – especially real property and some intangibles – is more restricted.
• For fraud, gain/loss can involve any kind of property, including real property, choses in action and intangibles.

Also:

• In theft, intention to permanently deprive is usually required.
• For fraud, intended gain or loss can be temporary (e.g. lying to postpone a payment).

“Keeping” and “not getting” – extended meanings

s 5(3):

• “Gain” includes:
  • Gaining by getting what one does not have; and
  • Gaining by keeping what one has.

s 5(4):

• “Loss” includes:
  • Losing by parting with what one has; and
  • Losing by not getting what one might get.

So fraud covers:

• Increasing one’s wealth or avoiding a decrease (keeping property longer than entitled).
• Causing another to miss out on an anticipated gain as well as suffering an actual asset depletion.

Fraud by False Representation – s 2

Statutory definition

Section 2(1):

A person is in breach of s 2 if they:

• Dishonestly make a false representation, and
• Intend, by making the representation:
  • To make a gain for themselves or another; or
  • To cause loss to another; or
  • To expose another to a risk of loss.

Section 2(2):

• A representation is false if:
  • It is untrue or misleading, and
  • The person making it knows that it is, or might be, untrue or misleading.

Section 2(3)–(5):

• “Representation” covers:
  • Any representation as to fact or law.
  • Includes representations as to the state of mind of:
    • The maker, or
    • Any other person.
• Representation may be express or implied.
• It is made if submitted “in any form” to a system or device designed to receive, convey or respond to communications, with or without human intervention.

Actus reus of s 2 – three elements

According to the handout, the actus reus involves:

1. A representation
2. Which is false (i.e. untrue or misleading)
3. Which is made by D

“False” – untrue or misleading (s 2(2)(a))

• Per Smith, Hogan & Ormerod:
  • An untrue statement is literally false.
  • A statement can be misleading even when literally true.

The handout emphasises:

• Prosecution must prove the representation is untrue or misleading, not “untrue and misleading”.
• It would be absurd if “untrue” meant just “literally untrue”:
  • Much language is metaphorical; the law must look at what is conventionally understood as untrue or misleading.
• “Untrue” should be taken as conventionally false, whether literally or metaphorically.

Falsity and knowledge of falsity – s 2(2)(b)

• A representation is “false” only if:
  • It is untrue or misleading; and
  • D knows that it is, or might be, untrue or misleading.

Question from the handout:

• What if what D says is actually true and not misleading, but D believes it to be false?

Case:

• Deller (1952)
  • D sold a car saying it was free of encumbrances. He believed he was lying because he thought there was a valid mortgage on the car.
  • In fact, the mortgage was invalid, so the car was unencumbered; what he said was true.
  • Held: no liability under the old “obtaining by false pretences” offence.
  • Under the Fraud Act, this would also not be a false representation (since it is not “untrue or misleading”), though it may be attempted fraud.

Representation – broad, including implied and continuing

Section 2(3):

• Representation may relate to:
  • Facts
  • Law
  • A state of mind (of D or another).

Implied representations – case illustrations:

• Barnard (1837)
  • Wearing an Oxford student’s gown implied a representation that D was a student.
• Idrees v DPP
  • Implied representation can be made through another person, acting effectively as an agent.
• Harris (1975)
  • Booking into a hotel is an implied representation of intention to pay at the end of the stay.
• Ray AC 370
  • Remaining at the table in a restaurant after consuming a meal was held to be a continuing representation that D intended to pay.
  • Handout notes similar reasoning may apply under the Fraud Act (see also Government of UAE v Allen EWHC 1712 (Admin)).

Credit and debit card use:

• Charles AC 177; Lambie AC 449
  • Presenting a card is an implied representation that:
    • The merchant will be paid by the card company; and possibly that
    • D has the authority of the bank/credit‑card company to use it.
  • In Lambie, the store manager was only concerned that the store would be paid; the handout notes debate over whether D is “impliedly” representing something to the store about the bank’s rights, raising concerns about how wide the notion of implied representation can stretch.

Overall:

• The category of implied representations is very wide, and the exact boundaries post‑Fraud Act remain somewhat unsettled.

“Making” the representation – including machines (s 2(5))

Section 2(5):

• A representation is “made” if it (or anything implying it) is submitted in any form to a system or device designed to receive, convey or respond to communications (with or without human intervention).

Consequences:

• One can “make” a representation to a machine or automated system (e.g. online forms, ATMs) just as to a person.
• The handout suggests:
  • It seems plausible that “making” a representation does not require that it be received or that communication be completed.
  • For machines, submission to the system may be enough, even if no human reads it.

Open question in the handout:

• If a person saves but does not send an email to their own computer, is that “submitted” to a system? The text notes that s 2(5) does not require submission to a system designed to “act on it”, raising interpretive issues.

Mens rea of s 2

Mens rea has three elements:

1. Dishonesty
   • Apply Ivey (see theft notes). D’s belief about facts is considered, but not D’s personal view of honesty.
2. Intention
   • D must intend, by making the representation, to make a gain or cause loss/risk of loss (see section on “causation in the head”).
3. Knowledge that the representation is or might be untrue or misleading (s 2(2)(b))
   • At least subjective awareness of risk of falsity.
   • Cannot be satisfied by “ought to have known”.

Case:

• Augunas EWCA Crim 2046
  • It is wrong to direct a jury that D is guilty if D ought to know the representation is untrue or misleading.
  • A subjective standard is required:
    • However, where D wilfully shuts their eyes to obvious doubts as to genuineness, they can be said to know it might be untrue or misleading.
    • This is “wilful blindness” functioning as constructive knowledge.

Fraud by Failing to Disclose Information – s 3

Statutory definition

Section 3:

A person is in breach if they:

• Dishonestly fail to disclose to another person information which they are under a legal duty to disclose, and
• Intend, by failing to disclose, to:
  • Make a gain for themselves or another; or
  • Cause loss to another; or
  • Expose another to a risk of loss.

Mens rea

• Dishonesty – same Ivey test.
• Intention – same gain/loss structure as above; must intend that the failure to disclose is the means of gain/loss.

Actus reus – failure to disclose under a legal duty

Key elements:

• D fails to disclose information.
• D is under a legal duty (not merely moral) to disclose that information.

The Law Commission originally floated the idea of a moral duty, but the Home Office Fraud Law Reform (2004) rejected this for two reasons:

1. Moral duty is too ambiguous.
2. Criminal law should not intrude too far on the caveat emptor principle.

The criminal law will not invent ad hoc legal duties solely to secure conviction under s 3. This is contrasted with gross negligence manslaughter, where criminal law does sometimes create duties of care beyond civil law (e.g. Willoughby).

Sources of a legal duty to disclose may include:

• Statute
• Contracts of utmost good faith (e.g. insurance)
• Express or implied terms of a contract
• Fiduciary relationships (trustee, agent, etc.)

Case illustrations:

• Razoq EWCA Crim 674
  • NHS doctor signed up with a locum agency; contract expressly required that any disciplinary proceedings be reported to the agency.
  • Court held: he was under a legal duty to disclose those proceedings.
• Mashta EWCA Crim 2595
  • D receiving asylum support on grounds of destitution then gained employment.
  • Charged with fraud by failing to disclose employment; appeal against sentence partly allowed.
  • Confirms that statutory or contractual schemes can impose clear legal duties to disclose.
• White EWCA Crim 714
  • D applied for a mortgage. He was not under a legal duty to disclose unemployment where the application did not require it.
  • No s 3 duty to disclose; but he could still have committed fraud by false representation under s 2 if he lied.
• Forrest and others EWCA Crim 308
  • Pitchford LJ emphasised:
    • Not every false representation gives rise to liability under s 3.
    • There is a risk of overlap between s 2 (false representation) and s 3 (failure to disclose), but courts will not lightly find an implied duty to disclose.
• D EWCA Crim 209
  • D paid council tax at a discounted rate on the basis she did not reside at the property. The council alleged she later moved back without notifying them, while continuing to pay at reduced rate.
  • Court of Appeal:
    • Expressed surprise there was no statutory duty to notify changed residence, but held there was in fact no such legal duty.
    • Distinction drawn between liability to pay and liability to notify.
    • Council could recover money civilly, but absence of a specific duty to notify meant no s 3 offence.

Exam point: For s 3 always ask:

• What is the source of a legal duty to disclose?
• If none (statute, contract, fiduciary, etc.), there is no s 3 offence, though s 2 may still apply if false statements are made.

Fraud by Abuse of Position – s 4

Statutory definition

Section 4(1):

A person is in breach if they:

• (a) Occupy a position in which they are expected to safeguard, or not to act against, the financial interests of another person;
• (b) Dishonestly abuse that position; and
• (c) Intend, by means of the abuse:
  • To make a gain for themselves or another; or
  • To cause loss to another; or
  • To expose another to a risk of loss.

Section 4(2):

• Abuse can consist of an omission as well as an act.

“Expected to safeguard / not act against” – whose expectation?

The term “expected” is undefined in the statute.

Academic views (as summarised in handout):

• Arlidge and Parry:
  • “Expected” might mean:
    • V thinks D is bound to safeguard/not act against V’s financial interests; or
    • Most people would think D is so bound.
• Ashworth:
  • Too variable if based purely on V’s subjective expectations.
  • It would not make sense to base it on D’s own expectation.
  • Courts may develop a standard of “reasonable expectation”.

This is clarified in:

• Valujevs EWCA Crim 2888
  • Fulford LJ:
    1. It is for the judge to decide whether D is potentially in such a position (where safeguarding is expected). If so, the jury then decides whether, on the facts, D actually did occupy such a position.
    2. The test of “expected to safeguard / not act against” is based on a reasonable person standard.

So:

• Whether D occupies a s 4 position is an objective, normative question: would a reasonable person regard D as expected to safeguard the other’s financial interests?

Nature of the “position” – fiduciary relationships

The position must implicate the financial interests of another.

The Law Commission (Report 276) suggested that many (but not all) s 4 cases will involve a fiduciary relationship, such as:

• Trustee – beneficiary
• Director – company
• Professional – client
• Agent – principal
• Employee – employer
• Partners in a firm
• Within a family
• Voluntary work relationships
• Other non–arm’s‑length contexts

Civil law concept (illustrated by Re Coomber ):

• Fiduciary relationships range from simple situations (e.g. an errand boy required to return change) to highly intimate and trusting relations.
• Duties of loyalty, “no profit” and “no conflict” rules may be relevant.

Conclusion from the handout:

• A fiduciary relationship is sufficient but not necessary for a “safeguarding” position under s 4.
• The statutory concept is wider but overlaps considerably with civil fiduciary ideas.

Abuse of position – example case

• Marshall EWCA Crim 2076
  • D was manager of a residential home for persons with severe learning difficulties.
  • She used £7,000 from residents’ accounts for her own purposes.
  • Conviction under s 4 upheld: classic abuse of a position where D was expected to safeguard residents’ financial interests.

Overlap with theft (Hinks):

• In Hinks, D received large “gifts” from a person with limited mental capacity, raising concerns about theft’s breadth.
• Fraud by abuse of position now clearly covers some situations where D exploits another’s trust to appropriate benefits, especially where there is a safeguarding role.

The handout asks:

• Does the existence of s 4 mean the Theft Act should no longer be used in such situations?
• It also notes that s 4 may help address certain gaps in theft law:
  • E.g. pirate copying of goods (where IPD is tricky under s 6 and Lloyd), or misuse of confidential information (not “property” for theft: Oxford v Moss).

Mens rea for s 4

• Dishonesty (Ivey).
• Intention (as under common elements):
  • D must intend, by means of the abuse of position, to make a gain or cause loss/risk of loss.

Related Offence 1: Making Off Without Payment – Theft Act 1978, s 3

Statutory definition

Section 3(1) Theft Act 1978:

• A person commits the offence if, knowing that payment on the spot for goods supplied or services done is required or expected, they:
  • Dishonestly make off without having paid as required or expected, and
  • Do so with intent to avoid payment of the amount due.

Section 3(2):

• “Payment on the spot” includes payment at the time of collecting goods on which work has been done or in respect of which service has been provided.

Section 3(3):

• The offence does not apply where:
  • The supply of goods or doing of the service is contrary to law; or
  • The service is such that payment is not legally enforceable.

Actus reus

Key elements:

• Goods supplied or service done, for which payment on the spot is required or expected.
• D makes off (leaves).
• D does so without paying as required or expected.

“Payment on the spot”:

Case:

• Troughton Crim LR 138
  • D, drunk, took a taxi; an argument ensued over route and fare.
  • The driver handed D to the police before completing the agreed journey (home address to be given at Highbury).
  • Conviction for making off quashed:
    • D could not have failed to pay “as required or expected” because the contract was not complete.
    • Agreement was to drive D home; only partial performance had occurred when police intervened.

So:

• There must be a situation where payment is due “on the spot” under the terms of the transaction; if the service is incomplete, that condition may not be met.

Mens rea

Three mental elements:

1. Knowledge that payment on the spot is required or expected.
2. Dishonesty.
3. Intent to avoid payment of the amount due.

Case:

• Allen AC 1029
  • D left a hotel without settling his bill.
  • Trial judge directed that it was enough that D intended to avoid paying when payment was expected.
  • Court of Appeal allowed the appeal:
    • s 3(1) requires an intention to avoid payment permanently, not merely to defer payment.

Another case:

• Vincent EWCA Crim 295
  • D stayed at two inns (Bricklayers Arms, Langton Arms), left without paying in full.
  • D claimed he had reached agreements to defer payment at both places (pending payments from TV and newspaper work).
  • Trial judge held that because those agreements were induced by D “dishonestly conning and manoeuvring” the owners, there was no “proper” agreement to postpone payment.
  • Court of Appeal disagreed:
    • Even if an agreement to defer payment is dishonestly obtained, it still defers the requirement/expectation of payment on the spot.
    • The fact that the agreement was secured dishonestly does not reinstate the expectation of payment on the spot, so the offence of making off may not be made out.

Exam emphasis:

• For making off:
  • There must be payment on the spot required/expected, and no valid deferral.
  • D must intend to avoid payment permanently.
  • If D merely intends to pay later, or secures a (legally effective) deferral, there is no offence (though there may be fraud).

Related Offence 2: Obtaining Services Dishonestly – Fraud Act 2006, s 11

Statutory definition

Section 11(1):

• D is guilty if they obtain services for themselves or another:
  • (a) by a dishonest act, and
  • (b) in breach of subsection (2).

Section 11(2):

• Services are obtained in breach of sub‑s (2) if:
  • (a) They are made available on the basis that payment has been, is being, or will be made for them;
  • (b) D obtains them:
    • Without any payment having been made; or
    • Without payment in full; and
  • (c) When D obtains them, D knows:
    • (i) that they are being made available on that pay‑basis or
    • (ii) that they might be;
    • But intends that payment will not be made, or will not be made in full.

Key comparison with fraud (ss 2–4):

• In s 11 there must be an actual “obtaining” of services.
• Under ss 2–4 no obtaining is required; intention to make gain/loss by dishonest conduct can suffice.

Elements of s 11

Actus reus:

• Services are made available on the basis that payment is or will be required.
• D obtains those services:
  • With no payment; or
  • Without full payment.

Mens rea:

• D acts dishonestly (Ivey).
• D knows of the payment basis (or at least that it might be so).
• D intends that payment will not be made or not made in full.

This offence fills gaps where:

• There is no misrepresentation (so s 2 may not apply); and
• No property is “obtained” (so theft/fraud by deception under old law are inapplicable).

Exam Strategy

When answering problem questions on fraud and related offences:

1. Identify the correct charge(s):
   • Fraud Act s 2, s 3, or s 4 (or several).
   • Alternatively or additionally:
     • Theft Act 1978 s 3 (making off)
     • Fraud Act 2006 s 11 (obtaining services dishonestly).
2. Apply the common fraud structure:
   • Dishonesty (Ivey) – handle separately.
   • Intention to gain/cause loss or risk – be precise about:
     • The type of gain/loss (money or property);
     • Whether it is temporary or permanent;
     • Whether D intends to gain by getting or by keeping, and loss by parting or not getting.
3. For s 2:
   • Show there is a representation (express or implied, possibly to a system).
   • Prove it is false (untrue or misleading) and that D knows it is or might be.
   • Show D intends, by making it, to gain/cause loss.
4. For s 3:
   • Identify a legal duty to disclose (statute, contract, fiduciary, etc.).
   • Show non‑disclosure.
   • Prove D intended, by failing to disclose, to gain/cause loss.
5. For s 4:
   • Establish D occupies a position where a reasonable person would expect them to safeguard (or not act against) another’s financial interests (Valujevs).
   • Show abuse of that position (act or omission).
   • Link the abuse to the intended gain/loss.
6. For making off (TA 1978 s 3):
   • Confirm payment on the spot is required/expected and that the contract was complete (Troughton).
   • Show D made off without paying as required/expected.
   • Prove knowledge of that obligation, dishonesty, and intention to avoid payment permanently (Allen).
   • Check for any agreement to defer payment, even if dishonestly obtained (Vincent).
7. For s 11 obtaining services:
   • Confirm services are provided on a payment basis.
   • Show D obtained them without payment (or in full), knowing of, or at least suspecting, that payment was or might be required.
   • Prove D intends that payment will not be made / not in full.