Fraud

Question 1

What are the three ways fraud can be committed according to the fraud act 2006?

Answer 1

Fraud is committed by either:

1) making a false representation; or
2) by failing to disclose information; or
3) by abuse of position.

Question 2

Explain the MR of fraud by making a false representation.

Answer 2

MR is satisfied where D:

1) has knowledge the representation they are making is or might be false; and
2) they are dishonest (as to this representation); and
3) They have intention to make a gain for themself or another, or to cause loss to another or expose the other to a risk of loss.

Question 2

Explain the AR of fraud by making a false representation.

Answer 2

Someone has the AR of read where the may a false representation.

Question 3

Explain the requirement of a false representation.

Answer 3

s2(2) of the FA 2006 provides a representation is false if:

1) it is untrue or misleading; or
2) the person making the representation knows that it is, or might be, untrue or misleading.

Question 4

When determining whether something is a repsresnation, what may this relate to?

Answer 4

A representation may relate to:

1) a fact; or
2) the law; or
3) the state of mind of the person making the representation and any other person.

Question 5

Can a representation be express or implied?

Answer 5

Yes - a representation can be express or implied.

Question 6

What from does a representation need to be in?

Answer 6

A representation may be:
- in words; or
- communicated by conduct.

there is no limitation on how this may be expressed, and it may be:
- in writing; or
- spoken; or
- posted on a website.

Question 7

Summarise what is deemed a representation.

Answer 7

• A representation may relate to a fact, the law or the state of mind of the person making the representation or any other person.
• The representation may be express or implied; and
• The representation can be made in writing or communicated through conduct. This will include oral statements, written statements and also representations posted on websites.

Question 8

Give an example of a representation as to the law.

Answer 8

Moneylender tells a debtor there is no legal defence to a claim for payment, but knows full well that there is.

This would be a representation as to the law. The moneylender clearly knows there is a legal defence but actively chooses to give the contrary, completely different information to the debtor.

Question 8

What is a represneation as to the state of mind?

Answer 8

Where someone states, for example, that they will do an act in the future (eg someone tells another they will change their will for their benefit).

A representation can also be where someone states that they will do a specific action in the future.

Question 9

Give two exampled where a representation is made through conduct (ie an implied representation).

Answer 9

Ordering food at a restaurant gives a representation that you as the customer will pay for the food and are willing to do so.

Presenting a credit card at the till gives an implied representation that you have the legal authority to use the credit card for payment.

Question 10

When is a representation false?

Answer 10

This is a question of fact for the jury.

It will usually involve a victim being deceived or misled by something said or written by D.

Eg burglar lies to homeowner saying they are entering the house to investigate a crime in the local neighbourhood. This is clearly a false representation.

Also, someone presenting a card at a till which they know they do not have the authority to use, constitutes a false representation.

Question 11

Is D guilty of fraud if they say something they believe is false, but is actually true?

Answer 11

No.

If D was to sell a patenting they believe is fake, but purports to be true, this would not be a false representation if the painting was actually genuine. The fact D thought what they were saying is untrue is irrelevant if what they are saying is actually factually correct.

Question 12

What constitutes misleading for the purposes of a false representation?

Answer 12

Where the representation is less than wholly true and capable of an interpretation to the detriment of the victim.

Eg, D asks for donations for a ‘sponsored swim to support cancer research’ but only donates 5% of the money to charity. This is misleading and therefore a false representation as the statement is misleading.

Question 13

Explain the decision in Idress.

Answer 13

D got someone else to take driving test for him.

MR for a false representation was satisfied when he booked the test online, as he knew the representation he was making was false.

Question 14

Explain the case of Nizzar.

Answer 14

D told customer their lottery ticket didn’t win anything. in fact D knew it had won £1million and chose not to say anything.

D knew this was a false representation.

Question 14

Explain the case of O’leary.

Answer 14

D visited elderly person home to claim he had done roof work. He had not done the roof work but tried to convince the person he had as he knew they had dementia.

MR for fraud by false representation was satisfied as he knew what he was saying was completely untrue.

Question 15

Does it need to be proven that anyone was actually deceived by a false representation?

Answer 15

No.

S2(5) FA 2006 provides a false representation made to a machine, system or device designed to receive, convey or respond to communications (with or without human interaction) can be sufficient for fraud by false representation.

Question 15

Can an email which is not read by a victim constitute a false representation?

Answer 15

Yes.

Question 16

What is the MR for fraud by false represneation?

Answer 16

D has made a false reprenseation:

1) dishonesty; and
2) which they have intended to use to make a gain for themself, or cause loss to another (or to expose the other to a risk of loss).

Question 17

Explain the dishonesty requirement of the MR of fraud by false representation.

Answer 17

Usually clear, but if it is not, the court may wish to use the dishonesty test from the case of Ivey (which is also used for theft).

Effectively, if not obvious the court will establish D’s awareness of the facts and determine whether their conduct was honest or not using the objective standard of the ordinary decent person.

Question 18

Explain the MR requirement for fraud by false representation that there must be intention to make a gain for themself, or to cause loss to another (or expose the other to a risk of loss).

Answer 18

By making the false representation, D must intend to make a gain or cause a loss, meaning there must be a link between the two.

Effectively, the loss to another or gain to themself or another, must be as a direct result of the representation.

The gain or loss can relate either to money or property.

Question 19

Can property in action and intangible property be the subject of a gain or loss for fraud by false representation?

Answer 19

Yes.

Question 19

Can the property subject to the gain or loss for fraud by false representation be temporary or permanent?

Answer 19

Yes - it can be either.

Question 20

Explain the requirements for fraud by failure to disclose information.

Answer 20

under s3 Fraud Act 2006, a person is guilty of fraud if: 1) thy dishonestly fail to disclose to another person information which they are under a legal duty to disclose; 2) intend, by failing to disclose the information, to make a gain for themselves or another, or to cause loss to another or to expose another to a risk of loss.

Question 21

Explain the failure to disclose information requirement of the AR for s3 Fraud.

Answer 21

Only relevant if D fails to dislike information when they are under a legal duty to do so. This includes duties under oral contracts, as well as written contracts. Examples of where there is a legal duty to disclose would include: 1) under statute (eg notifying changes to circumstances under welfare benefit applications); 2) if the transaction is one of good faith (eg failure to disclose relevant info on insurance applications); 3) failure to disclose under express or implied terms of a contract; 4) failure to disclose in accordance with a custom of a particular trade or market; 4) where there is an existence of a fiduciary relationship between the parties (eg agent and principal).

Question 21

In addition to he offence of fraud by failure to disclose (provided the MR and AR were satisfied) when would the victim also have a claim for damages?

Answer 21

If D breaches a legal duty to disclose information, the victim is entitled to bring action against them for damages.

Question 21

What is the MR requirement for s3 fraud (failure to disclose information)?

Answer 21

This is the same as the MR requirement for s2 and applies in the exact same way. D must intend to make a gain for themself or another, cause a loss to another, or expose the other to risk of loss.

Question 22

What is the definition for s4 fraud (fraud by abuse of position)?

Answer 22

D is guilty of fraud by abuse of position where they: 1) occupy a position in which they are expected to safeguard, or not to act against, the financial interests of other person; 2) dishonesty abuse that position; and 3) intend by means of the abuse of that position to make a gain for themselves or another, or to cause loss to another or to expose another to a risk of loss.

Question 23

Explain the AR for fraud by abuse of a position (s4 FA 2006).

Answer 23

D must occupy a relevant position and abuse that position.

Question 24

Explain the requirement for the AR of s4 fraud that D must occupy a relevant position.

Answer 24

It requires the existence of a position of financial trust between D and the victim, where D is expected to safeguard or not act against the financial interests of the victim or another.

Question 25

Give some examples of what may be deemed to be a position of financial trust for the AR of s4 fraud.

Answer 25

- trustee and beneficiary; - director and company; - professional person (eg accountant) and client; - agent and principal; and - employee and employer. May also arise in a family position or in the context of voluntary work.

Question 26

Explain the car of R v Valujevs.

Answer 26

Unlicensed gang masters abused position by exploiting migrant workers, making unlawful deductions from their wages and charging excessive rental payments. They were found to occupy a position capable of being one where they were expected to safeguard the financial interests of another. The illegality of the situation was immaterial.

Question 27

Explain the abuse of position requirement for the AR of s4 fraud.

Answer 27

This can be committed by a positive act but also by omission. Eg in the case of Rouse manager of care home used elderly residents bank cards (which he was meant to safeguard) to withdraw money and pay off his own bills. This was a clear abuse of his position of trust.

Question 28

Is the MR for s4 fraud the same as the MR for s3 and s2?

Answer 28

Yes. D must dishonestly have the intention to make a gain for themselves or another, or to cause a loss to another, or to expose another to a risk of loss.

Question 29

Can a D be liable for more than one of the fraud offences simultaneously?

Answer 29

Yes.