Here are some guidelines for answering an examination problem question on the legal topic of 'Fraud'.
INTRO (basics on fraud):
• Fraud Act 2006 came into force on January 15, 2007
• Abolishes the eight deception offences in the Theft Acts 1968 and 1978.
• Each offence in the Fraud Act 2006 is a conduct offence, complete on the accused's acts notwithstanding any result caused (representing a significant shift from the repealed deception offences)
• Section 1 introduces a new offence of fraud which can be committed in one of three ways where, D breaches one of the provisions in ss.2-4.
SECTION 2: FRAUD BY FALSE REPRESENTATION:
• Mortgage application forms.
• Life insurance forms.
Under s2 there is no need to prove a result of any kind (unlike under the old law). It is sufficient that D intends to cause loss or make a gain.
V AWARE STATEMENT IS FALSE
The effect is that D may be liable even though V knows that D's statement is false or V would have acted in the same way even if he had known of the falsity.
D STAYS SILENT AND DOES NOT CORRECT V
If having not actively misled V, and not being under a legal duty to correct V's error (as per s3), D could be construed as making an implied false representation, he may be liable under s.2.
PRE-2006 ACT: only persons could be deceived.
POST-2006 ACT: s2(5): ANY system or device.
• D creates spam email but does not send = committed this offence.
• Conduct element of the offence of fraud is made out.
• HOWEVER: Professor Ormerod (reading list): Escape route in which Tom may be able to say that he did not intend to gain or cause loss by that representation - However still liability for attempt.
Other related offences under Fraud Act 2006:
• SECTION 6: possession of articles for use in fraud.
- maximum 5 year sentence on indictment.
- “Article” defined in s8 as including any program or data held in electronic form.
- No mens rea is stated.
• SECTION 7: making or supplying articles for use in fraud.
- Maximum 10 years on indictment.
• SECTION 9: fraudulent trading using non-corporate business forms.
ACTUS REUS AND MENS REA FOR SECTION 2:
The actus reus requires only that a false or misleading representation was made.
Mens Rea is satisfied by proof that he knew the representation was or might be false: s2(2), and that he acted dishonestly: s2(1)(a), with intent to cause gain or loss: s2(1)(b).
Section 2(2)(a) provides that a representation is false by being either “untrue”, or “misleading”. False representation can be express or implied: S2(3).
No definition in the Fraud Act 2006.
Ghosh test (leading case):
(i) Was what was done dishonest according to the ordinary standards of reasonable and honest people? (OBJECTIVE ELEMENT) (Note: This was the entirety of the test under the previous case of Feely). If there is divergence beteen D’s standards of honesty and ordinary standards of reasonable honest people, the next stage is applied.
(ii) Did the defendant realise that reasonable and honest people would regard what he did as dishonest? (SUBJECTIVE ELEMENT)
D must know either: that his representation is untrue or misleading; or that it might be untrue or misleading.
2. INTENT to make a gain or loss
• Gain or loss must be in money or property: s5 (essentially the same requirement as s.34(2)(a) of the Theft Act 1968)
• ‘Property’ means any property whether real or personal (including things in action and other intangible property)
• D must intend to make gain by making the representation: s2(1)(b)
• No actual loss required.
3. Knowledge that representation is or might be untrue or misleading
SECTION 3: FRAUD BY FALLING TO DISCLOSE:
• Must have legal duty to disclose (a question of law for the judge)
• Section 2 discussion of dishonesty and intention to gain or cause loss above applies equally here.
SECTION 4: FRAUD BY ABUSE OF POSITION:
A person commits fraud under s.4 if he occupies a position in which he is expected to safeguard, or not to act against, the financial interests of another person: s4(1)(a), and dishonestly abuses that position: s4(1)(b) whether by act or omission: s4(2), intending, by abuse of that position, to make a gain: s4(1)(c)(i) or cause loss: s4(1)(c)(ii). Section 2 discussion of dishonesty and intention to gain or cause loss above applies equally here.
The Law Commission has stated that such a duty may arise within a family context.
The Home Office gave examples of relevant “positions” including where D is given access to V's premises.
The Law Commissions original proposal required secrecy. Although this element was later removed by the Home Office, it remains an important evidential matter (Ormerod).
SECTION 11: OBTAINING SERVICES DISHONESTLY:
• False credit card details to obtain services on internet.
• Climbing over wall to watch football match.
Section 11 replaces obtaining services by deception in s1 of the Theft Act 1978 (the Theft Acts failed to protect against obtaining via wholly automated processes). On indictment, it carries a maximum 5 years. Unlike ss.2-4, this offence requires D to obtain something - a service; it is a result offence. A causal element remains: D's dishonest act must be the cause of the service being obtained. The concept of services is limited to those for which payment is required (Sofroniou). There is no longer any need to show that deception was the cause of the obtaining.
D acting, for himself or another, to obtain services for which payment is or will become due and for which he fails to pay in whole or in part.
Requires proof of D knowing that the services are to be paid for or knowing that they might have to be paid for, and acting with a dishonest intent to avoid payment in whole or in part.
CONSPIRACY TO DEFRAUD:
Can be the most effective charge in a case where multiple defendants are engaged in a fraudulent course of conduct.
Q: What if the offence occurred before 2007 (a common examination sub-question)
Prior to 15 January 2007, the day the Fraud Act 2006 came into force, the statutory deception offences were contained in the Theft Acts 1968 and 1978 (obtaining property by deception and obtaining services by deception)
Obtaining property by deception under s15(1) Theft Act 1968 requires deliberate or reckless deception; obtaining of property belonging to another; causation or reliance; dishonesty and intention to permanently deprive.
If you have any questions on fraud, feel free to contact Tufts here at the student room.