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Criminal Law: Fraud Act 2006 Offences - IPSA LOQUITUR
Criminal Law: Fraud Act 2006 Offences
Section 1 of the Fraud Act 2006 provides that a person commits fraud if they are in breach of sections 2, 3 or 4 of the Act. These will each be looked at separately.
Common Elements of All Three Types of Fraud
Some concepts apply across the different types of fraud:
A gain refers to monetary or property gains (real, personal and things in action), whether temporary or permanent: s 5(2). It includes gains acquired by keeping what one has and getting something one doesn’t have: s 5(3).
A loss refers to monetary or property loss (real, personal and things in action), whether temporary or permanent: s 5(2). It includes losses caused by not getting what one might have gotten, as well as parting with what one has: s 5(4).
The defendant commits fraud by false representation if he dishonestly makes a false representation, intending by doing so to make a gain for himself or another or to cause loss to another or expose another to the risk of loss: s 2(1).
A representation is false if it is untrue or misleading and the defendant knows it is, or might be, untrue or misleading: s 2(2). A misleading statement is likely one which is strictly and literally true, but conceals relevant information. For example, if a person asks a shopkeeper whether their fruit are fresh and the shopkeeper responds that they are sourced from local farms, this would be misleading if the fruit had nevertheless sat in storage for months.
There is no requirement that anyone actually be deceived by or act on the representation: Proctor v The Chief Constable of Cleveland Police [2017] EWCA Crim 1531. If the defendant believes the statement to be false but it is in fact true, he may still be convicted of attempted fraud: R v Cornelius [2012] EWCA Crim 500.
If the defendant makes a statement which is partially true and partially untrue, this will still be a false representation. However, the prosecution will need to show that the defendant intended to make a gain, cause a loss or expose another to the risk of loss at least in part by using the false part of the statement: R v Gilbert [2012] EWCA Crim 2392.
Relevant representations include statements of fact, law or those relating to the defendant’s state of mind or the state of mind of any other person: s 2(3). They can be express or implied: s 2(4). Conduct which communicates information may suffice: R v Barnard (1837) 7 C&P 784. It is not clear whether a pure opinion (one not based on facts at all) can be a false representation, though under the old law it could not be: R v Bryan (1857) Dears & B 265.
It is not a representation to fail to correct a misconception that the victim is labouring other when the defendant has done nothing to induce it, though such behaviour may fall within the scope of section 3 instead. The same is true where the defendant has made a true representation which, due to changing circumstances, later becomes false: Government of the United Arab Emirates v Allen [2012] EWHC 1712.
For example, offering a stolen cheque as payment involves several implicit representations: R v Gilmartin (1983) 76 Cr App R 238. For example, it implies that the defendant has authority to draw money on the account the cheque is drawn from.
It is not clear whether the representation is made if it is not successfully communicated to anyone, such as where an email is sent but never read or a letter is posted but never arrives.
Knowledge requires subjective true belief, and it is not enough that a reasonable person would have known the representation is false: R v Augunas [2013] EWCA Crim 2046. Constructive knowledge or negligence is insufficient: Flintshire County Council v Reynolds [2006] EWCA Crim 2046
Section 3: Fraud by Failure to Disclose
The defendant commits fraud by failure to disclose if they dishonestly fail to disclose information to another person when they are under a legal duty, intending by this to make a gain for himself or another, or to cause another a loss, or to expose another to the risk of loss: s 3(1).
The statute does not state when a legal duty arises. Such duties may be statutory, derive from contract or fiduciary duties, or some other artefact of civil law (whether contractual, equitable, tortious or restitutionary): R v Razoq [2012] EWCA Crim 674. The prosecution must show that the defendant failed to meet their obligations under the duty: R v Forrest [2014] EWCA Crim 308.
It is not clear whether the defendant must be aware that they are subject to a duty.
The defendant commits fraud by abuse of position if they occupy a position in which they are expected to safeguard, or not act against, another person’s financial interest, and they dishonestly abuse this position intending to make a gain for themselves of another, or to cause another a loss, or to expose another to the risk of loss: s 4(1). A defendant can commit this offence by omission as well as by an act: s 4(2).
The meaning of a ‘position’ is unclear. It almost certainly includes all fiduciary duties (such as trustees and companies directors), but also appears to go beyond this. The government, when passing the law, suggested that it might also apply where the defendant is given access to the victim’s property, for example. It appears that it also enough that the defendant has taken responsibility for collecting and distributing wages, even where a fiduciary duty does not exist: R v Valujes [2014] EWCA Crim 2888.
A position is abused if it is used incorrectly or improperly: R v Pennock [2014] EWCA Crim 598.
Section 6: Possessing Articles for Fraud
The actus reus of the section 6 offence is possessing or controlling any article: s 6(1).
The mens rea of the section 6 offence is intention that the article be used in a future fraud (though there is no need to show he had a specific fraud in mind): R v Sakalauskas [2013] EWCA Crim 2278.
‘Any Article’
As well as physical objects, the meaning of ‘article’ under the Fraud Act 2006 includes any programs or data held in electronic form: s 8(1). It is not necessary that the article only has illegal uses: R v Nimley [2010] EWCA Crim 2752.
A person possesses an article if they can access and control it, even if another person physically holds the item: R v Montague [2013] EWCA Crim 1781. The meaning of ‘control’ is undefined but is thought to be some lesser state than possession.
It is likely that they must also know that they can access and control it to possess something, by analogy with the drug possession cases, but need not know what exactly the article is: Warner v Metropolitan Police Commissioner [1969] 2 AC 256. It would be difficult to establish the mens rea if the defendant did not know the nature of the article, however.
Section 7: Making/Supplying Articles for Fraud
The actus reus of the section 7 offence is making, adapting, supplying or offering to supply any article: s 7(1).
The mens rea of the section 7 offence is established if the defendant (a) knows that the article is designed or adapted for use in the course of or in connection of fraud, or (b) intends that the article be used to commit or assist in the commission of fraud: s 7(1).
Section 11: Dishonestly Obtaining Services
The actus reus of the section 11 offence is doing an act which obtains for himself or another services for which payment is or will become due, without paying for them in full: s 11(1)-(2).
The mens rea of the section 11 offence has two elements. Firstly, the defendant must be acting dishonestly. Secondly, the defendant must know the services are (or might be) being provided in return for payment, and intends that payment will not be made (in full or otherwise): s 11(2)
Select an answerYesNoIt depends on whether he has a duty to disclose