Fraud

How many ways can fraud be committed under the Fraud Act 2006?

Fraud is one offence that can be committed in three ways.

What are the three ways of committing fraud under the Fraud Act 2006?

Fraud by false representation under section 2, fraud by failure to disclose under section 3, and fraud by abuse of position under section 4.

Is fraud under the Fraud Act 2006 a conduct crime or a result crime?

A conduct crime.

What is the maximum penalty for fraud tried on indictment?

Ten years’ imprisonment or an unlimited fine.

Which provision sets out the offence and maximum penalty for fraud?

Section 1 of the Fraud Act 2006.

What is fraud by false representation under section 2 of the Fraud Act 2006?

Dishonestly making a false representation, knowing that it is or may be untrue or misleading, with intent to make a gain or cause or expose another to a risk of loss.

What is the actus reus of fraud by false representation?

Making a false representation.

Must the representation actually deceive anyone for section 2 fraud?

No. There is no requirement for actual deception.

Must the defendant actually obtain a gain or cause a loss for section 2 fraud?

No. An intention to make a gain or cause or expose another to a risk of loss is sufficient.

Can a representation under section 2 be express?

Yes.

Can a representation under section 2 be implied?

Yes.

Which provision confirms that a representation may be express or implied?

Section 2(4) of the Fraud Act 2006.

Can an implied representation arise from the defendant’s words?

Yes.

What did R v King establish about implied representations through words?

R v King held that a mileage claim stated to “may not be correct” could imply that it might be correct when the defendant knew it was false.

Can an implied representation arise from conduct?

Yes.

What did DPP v Ray establish about implied representations through conduct?

DPP v Ray held that ordering and eating a meal could amount to a continuing implied representation that the diner had the means and intention to pay.

What representation was implied when the defendant ordered and ate a meal in DPP v Ray?

That the defendant had the means and intention to pay for the meal.

What did Idrees v DPP establish about representation by conduct?

Idrees v DPP held that arranging for another person to take a driving test in the defendant’s place amounted to a false representation.

Can pure silence without any accompanying action amount to a representation under section 2?

No.

Which case confirms that pure silence cannot amount to a representation?

R v Twaite.

What subjects can a representation concern under section 2(3)?

Fact, law or a person’s state of mind.

Can a false representation concern the defendant’s opinion or belief?

Yes, if the defendant does not genuinely hold that opinion or belief.

What did Edgington v Fitzmaurice establish about statements of opinion or belief?

Edgington v Fitzmaurice held that a statement about an opinion or belief may be false where the defendant does not actually hold it.

When can a statement presented as opinion amount to a statement of material fact?

Where one party knows facts not equally known by the other and implies that there are facts supporting the opinion.

What did Smith v Land and House Property Corporation establish about statements of opinion?

Smith v Land and House Property Corporation held that an opinion from a person with superior knowledge may imply a factual basis for that opinion.

Can a false statement about future intention amount to a false representation?

Yes.

Which case confirms that a false statement of intention can amount to a false representation?

DPP v Ray.

When is a representation false under section 2(2)(a)?

When it is untrue or misleading.

Is overcharging for goods or services automatically a false representation?

No. A person is generally entitled to charge whatever price they consider appropriate.

What is the general principle concerning the price charged for goods or services?

The seller may generally set the price, and the customer decides whether to accept it.

When may overcharging amount to a false representation?

Where the surrounding relationship creates an implied representation that the charge is fair.

What did R v Silverman establish about overcharging?

R v Silverman held that a builder in a relationship of mutual trust impliedly represented that the charge was fair.

Why did the charge in R v Silverman amount to a false representation?

The circumstances of mutual trust created an implied representation that the price was fair.

How was trust relevant in R v Jones?

The defendant was the victim’s long-time and trusted friend, supporting an implied representation concerning the fairness of the charge.

Can a representation be made to a machine or automated system?

Yes.

Which provision confirms that representations may be made to machines?

Section 2(5) of the Fraud Act 2006.

What systems are covered by section 2(5)?

Systems or devices designed to receive, convey or respond to communications.

What conduct was section 2(5) intended to capture?

Conduct such as using stolen cards and PINs at cash machines or making fraudulent online purchases.

What is the first mens rea element of fraud by false representation?

Dishonesty.

What test determines dishonesty for Fraud Act 2006 offences?

The test in Ivey v Genting Casinos.

What is the first stage of the Ivey dishonesty test?

Determine the defendant’s actual knowledge and belief as to the facts.

What is the second stage of the Ivey dishonesty test?

Decide whether the conduct was dishonest by the standards of ordinary decent people.

Do the negative definitions of dishonesty in section 2(1) of the Theft Act 1968 apply to Fraud Act offences?

No.

Is every lie told to obtain employment necessarily dishonest?

No.

What did R v Clarke establish about lies in job applications?

R v Clarke held that lying to obtain employment is not necessarily dishonest, including where the defendant believed they could perform the job properly and intended to do so.

What mens rea must the defendant have regarding the falsity of the representation?

The defendant must know that the representation is or may be untrue or misleading.

Which provision sets out the mens rea concerning falsity?

Section 2(2)(b) of the Fraud Act 2006.

Is awareness that a representation might be false sufficient under section 2(2)(b)?

Yes.

Is carelessness or negligence about the truth sufficient for section 2 fraud?

No.

What level of fault concerning truth is required for false representation fraud?

Indifference to or disregard of whether the representation is true.

What did R v Staines establish about belief in the truth of a representation?

R v Staines held that a genuine belief that a representation is true prevents liability, however unreasonable that belief may be.

What is the final mens rea element of fraud by false representation?

Intention to make a gain or cause or expose another to a risk of loss.

Which provision defines gain and loss for Fraud Act offences?

Section 5 of the Fraud Act 2006.

To what does gain or loss extend under section 5(2)?

Money or other property, whether real, personal or intangible.

Can a gain or loss be temporary?

Yes.

Can a gain or loss be permanent?

Yes.

What does gain include under section 5(3)?

Getting what one does not have or keeping what one already has.

Can obtaining employment amount to a gain?

Yes.

What does loss include under section 5(4)?

Parting with what one has or not obtaining what one might otherwise have obtained.

Must the intended gain be for the defendant personally?

No. It may be intended for the defendant or another person.

What intentions are sufficient concerning gain or loss under the Fraud Act 2006?

Intending a gain for oneself, a gain for another, a loss to another, or exposing another to a risk of loss.

Must the intended loss actually occur?

No.

Must the intended gain actually occur?

No.

What did R v Dziruni establish about false representations in job applications?

R v Dziruni held that making a false representation with a view to obtaining employment amounted to intending a gain.

Does an intention to obtain a job automatically establish dishonesty?

No. Dishonesty must still be established under the Ivey test.

In the landscape-gardener example, why is dishonesty not automatic?

The applicant believed his experience made him qualified, so the jury would have to assess his actual beliefs before applying the standards of ordinary decent people.

What is fraud by failure to disclose under section 3 of the Fraud Act 2006?

Dishonestly failing to disclose information which the defendant is under a legal duty to disclose, intending thereby to make a gain or cause or expose another to a risk of loss.

What are the actus reus elements of fraud by failure to disclose?

The existence of a legal duty to disclose and a failure to disclose the relevant information to another person.

Does the Fraud Act 2006 define exhaustively when a legal duty to disclose exists?

No.

What sources of a legal duty to disclose were identified by the Law Commission?

Statute, contracts of utmost good faith, express or implied contractual terms, trade or market custom, and fiduciary relationships.

Can a statutory provision create a duty to disclose?

Yes.

What is an example of a statutory duty to disclose?

Disclosure obligations governing company prospectuses.

Can a contract of utmost good faith create a duty to disclose?

Yes.

What is an example of a transaction of utmost good faith?

A contract of insurance.

Can an express contractual term create a duty to disclose?

Yes.

Can an implied contractual term create a duty to disclose?

Yes.

Can custom within a particular trade or market create a duty to disclose?

Yes.

Can a fiduciary relationship create a duty to disclose?

Yes.

What is an example of a fiduciary relationship creating a duty to disclose?

A relationship between principal and agent.

What did R v Razoq establish about contractual duties to disclose?

R v Razoq held that a doctor’s contractual promise to inform a locum agency of disciplinary proceedings created a legal duty to disclose.

What happened in R v Razoq?

The doctor failed to tell the agency about disciplinary proceedings despite agreeing by contract to do so.

What did R v Mashta establish about benefit claims?

R v Mashta held that a person claiming benefits on the ground of destitution had a legal duty to disclose later employment and changed financial circumstances.

What must the prosecution prove concerning non-disclosure under section 3?

That the defendant failed to disclose the relevant information to another person.

What is the first mens rea element of fraud by failure to disclose?

Dishonesty under the Ivey test.

What is the second mens rea element of fraud by failure to disclose?

Intention, through the failure, to make a gain or cause or expose another to a risk of loss.

Do the Theft Act 1968 section 2(1) definitions of dishonesty apply to section 3 fraud?

No.

Must fraud by failure to disclose produce an actual gain or loss?

No.

Can fraud by failure to disclose be committed to benefit another person?

Yes.

Can exposure to a risk of loss satisfy section 3?

Yes.

Is gain under section 3 limited to acquiring new property?

No. It also includes retaining property already held.

Is loss under section 3 limited to parting with existing property?

No. It includes failing to obtain property that might otherwise have been obtained.

What is fraud by abuse of position under section 4 of the Fraud Act 2006?

Dishonestly abusing a position in which the defendant is expected to safeguard, or not act against, another person’s financial interests, intending to make a gain or cause or expose another to a risk of loss.

What are the actus reus elements of fraud by abuse of position?

Occupying a qualifying position and dishonestly abusing that position.

What type of position is required under section 4?

A position in which the defendant is expected to safeguard, or not act against, another person’s financial interests.

Does the Fraud Act 2006 define exhaustively which positions are covered by section 4?

No.

Is a fiduciary duty required for fraud by abuse of position?

No.

In what relationships is a qualifying position especially easy to establish?

Professional, fiduciary or long-term business relationships.

Can fraud by abuse of position arise outside a professional or commercial relationship?

Yes.

Can a qualifying position arise within a family relationship?

Yes.

Can a qualifying position arise through voluntary work?

Yes.