Criminal Notes TP2
Fraud:
1.0 Introduction and Background
The law regarding fraud was reformed through the enactment of the Fraud Act 2006, which
came into law on 15th January 2007. Prior to this the fraud offences were set out in sections
15, 16 and 20 of the Theft Act 1968 and sections 1 and 2 of the Theft Act 1978. The decision
for reform arose out of the Law Commission’s Report on Fraud published in 2002 which
criticised the law at the time for being too broad and complicated and stated that it was out of
date in that it did not make any allowance for modern means of defrauding through
technological advances.
The Fraud Act 2006 provides one general offence of fraud which can be committed in three
different ways:
(i) By false representation
(ii) By failing to disclose information
(iii) By abuse of position.
The Act also created the key new offence of obtaining services dishonestly
Examination Point
The Fraud Act 2006 did create other offences which can be found by looking at the statue
itself if you are keen to undertake further reading, however for the purposes of your studies
these are the common offences that you are expected to have an understanding of. Pay
attention, in legal terms this is a relatively new Act there is not much case law on the topic so
it is a very statute heavy area. It is vital, therefore, that you understand the Act well and are
able to identify and explain the different offences.
2.0 Fraud
Section 1 of the Fraud Act 2006 provides as follows:
A person is guilty of fraud if he is in breach of any of the sections listed in subsection (2)
(which provide for different ways of committing the offence).
(2) The sections are—
(a) section 2 (fraud by false representation),
(b) section 3 (fraud by failing to disclose information), and
,(c) section 4 (fraud by abuse of position).
A vital initial point to note is that these offences are all conduct offences and will be
committed upon completion of the defendant’s fraudulent conduct. It is not necessary for the
purposes of the offence that anyone actually be defrauded. For example, say the defendant is
selling his car and is desperate for a buyer. A potential buyer approaches who tells the
defendant they are looking to buy a green car. The defendant believes them to be totally
colourblind and tells them that he has such a car and is willing to sell it to them, thus making
a fraudulent representation with the intention of procuring a sale of the vehicle. It so happens
that the buyer is not colourblind, and is thus not defrauded by the lie. For the purposes of the
fraud offences this is irrelevant, the offence is completed upon the carrying out of the
fraudulent act.
2.1 Fraud by False Representation
Section 2 of the Fraud Act 2006 provides
A person is in breach of this section if he:
(a) dishonestly makes a false representation, and
(b) intends, by making the representation:
(i) to make a gain for himself or another, or
(ii) to cause loss to another or to expose another to a risk of loss.
2.1.1 Actus Reus
Making a false representation
A representation is a statement that portrays and communicates a situation or state of affairs.
Section 2(3) provides that the actus reus of the offence covers:
Any representation as to fact or law, including a representation as to the state of mind of—
(a) the person making the representation, or
(b) any other person.
Representations can be made in numerous ways. For example, using the car discussed above,
the colour of that car could be communicated, or represented to another person by each of the
following means:
-Directly verbally communicating it.
Person 1: “I have a blue car”.
-Confirming someone else’s assumption of the colour indirectly.
,Person 1: “You have a lovely blue coloured car”
Person 2: “Thank you”
-Through a silent physical action.
Person 1: “If you have a blue car please stand on the left hand side of the room.”
Person 2: *moves to the left*
-By doing nothing.
Person 1 to Person 3: “Person 2 has a lovely blue car”
Person 2: *does not react*
It can be seen from this, albeit slightly ridiculous example, that there is more than one way of
going about communicating information or in legal terms, making a representation to others.
Section 2(4) of the Act deals with this by setting out that a representation may be express or
implied. The express representation being doing or saying something that directly asserts
things to be a certain way. In the example above, this would be achieved by the verbal
communication and the physical action. The implied representation is made by acting in a
way that implies that things are a certain way. In the example above this would be done by
saying thank you in return to the compliment about the way. The two words imply acceptance
and confirmation of what has been said prior to this. It would also be done by staying silent in
those circumstances as this too implies acquiescence to what is being said about the state of
affairs.
Case in Focus
Metropolitan Police Commissioner v Charles (1977)
The defendant had been told by his bank manager that he was not to cash more than one
cheque a day and was only authorised to write cheques for amounts up to the value of £30.
The defendant, ignoring this, went out and wrote a number of cheques to casinos which
subsequently bounced. The House of Lords held that by handing over these cheques he was
impliedly representing that he had an account with the bank named on the cheque and that he
had their authority to make out the cheques. As this was not the case his representation was
held to be false.
Case in Focus
R v Rai (1999) the Times, November 10
In this case, the defendant Mr Rai applied to the council social services for a sum of money to
enable him to undertake necessary adaptations in his home in order that he could care for his
elderly mother there. The council agreed to provide assistance amounting to £9,500 and later
that year they began works in Mr Rai’s home. At the time the council had started works,
however, Mr Rai’s mother had passed away and Mr Rai did not inform the council of the
change in circumstance as he wished to keep the grant regardless. The Court considered Mr
, Rai’s conduct as a whole and held that it had amounted to a continuing representation that his
mother was alive and that the works were undertaken for her benefit. As she had died already
this was no longer the case and Mr Rai held a new intention that the works would be carried
out for his own benefit. By doing nothing and allowing the works to be undertaken in his
house Rai was continuing the representation. This case demonstrates how a representation
will be held to have been made where the defendant has deliberately omitted to change a
perception that another person holds.
In modern day times it is not just other people that representations are made to. Increasingly
digital communication and machinery are taking over more and more aspects of life
especially information handling. Every time that you, the reader, sign up to a new social
media site you are representing to that server that you are the person whose details you are
entering in. When you use an ATM machine you are representing to that machine that you
are the owner of the account that you are withdrawing from or that you have permission to be
withdrawing from that person’s account. Examples of technological means could be listed at
length and accordingly, the Act provides in s.2(5) that for the purposes of the offence a
representation may be regarded as made if it is submitted to a system or device designed to
receive, convey or respond to communications.
Having gained an understanding of what will constitute a qualifying representation for the
purposes of the Act it is necessary to consider the requirement that the representation be false.
Section 2(2) provides an explanation of what will be considered a false representation stating
that a representation is false it is untrue or misleading.
2.1.2 Mens Rea
Dishonestly;
Knowing the representation is untrue or misleading, and;
Intending to make a gain, cause a loss, or cause a risk of loss.
Dishonestly
For the purposes of fraud, dishonesty is a subjective concept which is assessed using an
application of the common law test set out in R v Ghosh [1982] 3 WLR 110. It is a two-part
test which asks:
1. According to the ordinary standards of reasonable and honest people were the
defendant’s actions dishonest?
2. If it was dishonest by those standards, then did defendant himself realise what he
was doing was dishonest?
Only where both prongs of this test are answered in the affirmative will the conduct be
considered dishonest. This test is a matter of fact to be considered by the jury.
Knowing the representation is untrue or misleading
In order for the representation to be considered false the person making it must know that it is
untrue or misleading. This requires a subjective understanding on the part of the defendant.
Going back to the car scenario from earlier, if the defendant was to for whatever reason
Fraud:
1.0 Introduction and Background
The law regarding fraud was reformed through the enactment of the Fraud Act 2006, which
came into law on 15th January 2007. Prior to this the fraud offences were set out in sections
15, 16 and 20 of the Theft Act 1968 and sections 1 and 2 of the Theft Act 1978. The decision
for reform arose out of the Law Commission’s Report on Fraud published in 2002 which
criticised the law at the time for being too broad and complicated and stated that it was out of
date in that it did not make any allowance for modern means of defrauding through
technological advances.
The Fraud Act 2006 provides one general offence of fraud which can be committed in three
different ways:
(i) By false representation
(ii) By failing to disclose information
(iii) By abuse of position.
The Act also created the key new offence of obtaining services dishonestly
Examination Point
The Fraud Act 2006 did create other offences which can be found by looking at the statue
itself if you are keen to undertake further reading, however for the purposes of your studies
these are the common offences that you are expected to have an understanding of. Pay
attention, in legal terms this is a relatively new Act there is not much case law on the topic so
it is a very statute heavy area. It is vital, therefore, that you understand the Act well and are
able to identify and explain the different offences.
2.0 Fraud
Section 1 of the Fraud Act 2006 provides as follows:
A person is guilty of fraud if he is in breach of any of the sections listed in subsection (2)
(which provide for different ways of committing the offence).
(2) The sections are—
(a) section 2 (fraud by false representation),
(b) section 3 (fraud by failing to disclose information), and
,(c) section 4 (fraud by abuse of position).
A vital initial point to note is that these offences are all conduct offences and will be
committed upon completion of the defendant’s fraudulent conduct. It is not necessary for the
purposes of the offence that anyone actually be defrauded. For example, say the defendant is
selling his car and is desperate for a buyer. A potential buyer approaches who tells the
defendant they are looking to buy a green car. The defendant believes them to be totally
colourblind and tells them that he has such a car and is willing to sell it to them, thus making
a fraudulent representation with the intention of procuring a sale of the vehicle. It so happens
that the buyer is not colourblind, and is thus not defrauded by the lie. For the purposes of the
fraud offences this is irrelevant, the offence is completed upon the carrying out of the
fraudulent act.
2.1 Fraud by False Representation
Section 2 of the Fraud Act 2006 provides
A person is in breach of this section if he:
(a) dishonestly makes a false representation, and
(b) intends, by making the representation:
(i) to make a gain for himself or another, or
(ii) to cause loss to another or to expose another to a risk of loss.
2.1.1 Actus Reus
Making a false representation
A representation is a statement that portrays and communicates a situation or state of affairs.
Section 2(3) provides that the actus reus of the offence covers:
Any representation as to fact or law, including a representation as to the state of mind of—
(a) the person making the representation, or
(b) any other person.
Representations can be made in numerous ways. For example, using the car discussed above,
the colour of that car could be communicated, or represented to another person by each of the
following means:
-Directly verbally communicating it.
Person 1: “I have a blue car”.
-Confirming someone else’s assumption of the colour indirectly.
,Person 1: “You have a lovely blue coloured car”
Person 2: “Thank you”
-Through a silent physical action.
Person 1: “If you have a blue car please stand on the left hand side of the room.”
Person 2: *moves to the left*
-By doing nothing.
Person 1 to Person 3: “Person 2 has a lovely blue car”
Person 2: *does not react*
It can be seen from this, albeit slightly ridiculous example, that there is more than one way of
going about communicating information or in legal terms, making a representation to others.
Section 2(4) of the Act deals with this by setting out that a representation may be express or
implied. The express representation being doing or saying something that directly asserts
things to be a certain way. In the example above, this would be achieved by the verbal
communication and the physical action. The implied representation is made by acting in a
way that implies that things are a certain way. In the example above this would be done by
saying thank you in return to the compliment about the way. The two words imply acceptance
and confirmation of what has been said prior to this. It would also be done by staying silent in
those circumstances as this too implies acquiescence to what is being said about the state of
affairs.
Case in Focus
Metropolitan Police Commissioner v Charles (1977)
The defendant had been told by his bank manager that he was not to cash more than one
cheque a day and was only authorised to write cheques for amounts up to the value of £30.
The defendant, ignoring this, went out and wrote a number of cheques to casinos which
subsequently bounced. The House of Lords held that by handing over these cheques he was
impliedly representing that he had an account with the bank named on the cheque and that he
had their authority to make out the cheques. As this was not the case his representation was
held to be false.
Case in Focus
R v Rai (1999) the Times, November 10
In this case, the defendant Mr Rai applied to the council social services for a sum of money to
enable him to undertake necessary adaptations in his home in order that he could care for his
elderly mother there. The council agreed to provide assistance amounting to £9,500 and later
that year they began works in Mr Rai’s home. At the time the council had started works,
however, Mr Rai’s mother had passed away and Mr Rai did not inform the council of the
change in circumstance as he wished to keep the grant regardless. The Court considered Mr
, Rai’s conduct as a whole and held that it had amounted to a continuing representation that his
mother was alive and that the works were undertaken for her benefit. As she had died already
this was no longer the case and Mr Rai held a new intention that the works would be carried
out for his own benefit. By doing nothing and allowing the works to be undertaken in his
house Rai was continuing the representation. This case demonstrates how a representation
will be held to have been made where the defendant has deliberately omitted to change a
perception that another person holds.
In modern day times it is not just other people that representations are made to. Increasingly
digital communication and machinery are taking over more and more aspects of life
especially information handling. Every time that you, the reader, sign up to a new social
media site you are representing to that server that you are the person whose details you are
entering in. When you use an ATM machine you are representing to that machine that you
are the owner of the account that you are withdrawing from or that you have permission to be
withdrawing from that person’s account. Examples of technological means could be listed at
length and accordingly, the Act provides in s.2(5) that for the purposes of the offence a
representation may be regarded as made if it is submitted to a system or device designed to
receive, convey or respond to communications.
Having gained an understanding of what will constitute a qualifying representation for the
purposes of the Act it is necessary to consider the requirement that the representation be false.
Section 2(2) provides an explanation of what will be considered a false representation stating
that a representation is false it is untrue or misleading.
2.1.2 Mens Rea
Dishonestly;
Knowing the representation is untrue or misleading, and;
Intending to make a gain, cause a loss, or cause a risk of loss.
Dishonestly
For the purposes of fraud, dishonesty is a subjective concept which is assessed using an
application of the common law test set out in R v Ghosh [1982] 3 WLR 110. It is a two-part
test which asks:
1. According to the ordinary standards of reasonable and honest people were the
defendant’s actions dishonest?
2. If it was dishonest by those standards, then did defendant himself realise what he
was doing was dishonest?
Only where both prongs of this test are answered in the affirmative will the conduct be
considered dishonest. This test is a matter of fact to be considered by the jury.
Knowing the representation is untrue or misleading
In order for the representation to be considered false the person making it must know that it is
untrue or misleading. This requires a subjective understanding on the part of the defendant.
Going back to the car scenario from earlier, if the defendant was to for whatever reason
