Fraud

Fraud by False Representation: s2 of the Fraud Act 2006:

1. 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. A representation is false if -
      a) it is untrue or misleading, and
      b) the person making it knows that it is, or might be, untrue or misleading.
3. ‘Representation’ means any representation as to fact or law, including a representation as to the state of mind of-
     a) the person making the representation
     b) any other person
4. A representation may be express or implied

5. For the purposes of this section a representation may be regarded as made  if it (or anything implying it) is submitted in any form to any system or device designed to receive, convey or respond to communications (with or without human intervention. 

There are 4 elements to consider:

1. Make a false representation

2. Dishonestly

3. Knowing that the representation was or might be untrue or misleading

4. With intent to make a gain for himself or another, to cause loss to another or to expose another to risk of loss

Explained in subsections (2)-(5) of s2 of the Fraud Act 2006 – fraud is a conduct crime which means no particular end result must be proved (just making the false representation is enough). The crime is complete as soon as the defendant makes the false representation provided that it is made with the necessary dishonest intent (mens rea). 

In s2(2) ‘false’ means untrue or misleading but the word ‘representation’ is not defined. In s2(3) it states that a ‘representation’ means any representation as to fact or law. A difficulty arises where the representation is a statement of opinion. If the statement is not the genuine opinion of the person making it, it can amount to fraud, but often the victim will prefer to take civil action to recover his money, only resorting to criminal law when there is little prospect of succeeding. Thus, a statement that a car is in good condition is often made by car sales persons. This will only give rise to legal rights when the seller knows that is not the case or could not possibly have held that view. 

However if where the representation was true then becomes false, the offence can be committed by not telling of the change. This can be seen in the cases of DPP v Ray 1974 and Rai 2000.

• DPP v Ray 1974 – students went out to a meal, the defendant only had 10p on him. His friend offered to lend him money but after eating the meal they decided not to pay. They ran out the restaurant without leaving any payment or offering any payment. Court decided there was implied representation when the meal was ordered and the implied representation must have been a continuing representation so long as the defendant stayed in the restaurant.

• Rai 2000 – defendant applied for a grant from the council towards providing a downstairs bathroom for the use of his elderly and infirm mother. The council approved and 2 days later his mother died; the defendant failed to inform the council of the changes and used the grant for the agreed modifications. The representation was true but became false.

Section 2(3) states ‘…including a representation as to the state of mind of the person making the representation or any other person’. Example; going to a parent and asking to borrow £10 for a textbook and going to the pub instead (falsely representing your state of mind), going to a parent and asking to borrow £10 to help your brother buy a textbook and going to the pub instead (falsely representing the state of mind of ‘any other person’).

Section 2(4), a representation may be express or implied. It can be expressly made in many ways; the Act puts no limit on this(written/texted/spoken directly or by phone/radio/posted on a website, podcast or email). A representation can be implied by conduct (credit card, cheques or debit cards). This is seen in the cases of MPC v Charles 1976 and Lambie 1982

• MPC v Charles 1976 – giving a cheque makes the implied representation that he has the authority to use the cheque; in this case, the cheque was to a casino and backed by a cheque guarantee card; as the account was overdrawn by its agreed limit, this could be fraud.

• Lambie 1982 – use of a credit card is an implied representation that the user has authority from the credit company to use the card; in this case, the fact that the transaction would take the card over its limit meant there was no such authority from the credit card company, so an offence of fraud could be committed.

A representation can be made through a gesture, such as a nod, or by presence in a restricted area that implies the right to be there. This includes wearing a uniform or identification badge that implies a certain status or right to be present.

The Fraud Act 2006 uses the Ghosh Test used in Theft as well. The cast came from the case Ghosh 1982. It is a two part test and is stated as follows;

1. Would the defendant’s behaviour be regarded as dishonest by the standards of reasonable and honest people? (if the answer is no then the defendant is not guilty)

2. Was the defendant aware that his conduct would be regarded as dishonest by reasonable and honest people?

The first part of the test is objective and the second part of the test is subjective. If both parts of the test are satisfied, the defendant fulfils the criteria for being dishonest. 

Knowing that the representation was or might be untrue or misleading (mens rea):

Representation is defined as ‘false’ if it is untrue or misleading. The person making the false representation must know that it is, or might be untrue or misleading, but makes a decision to make it anyway.

With intent to make a gain for himself or another, to cause loss to another or to expose another to risk of loss (mens rea):

This is ‘with intent to’. This means that there is no need for anyone to have suffered any actual loss or be exposed to any loss, or even that the defendant makes a gain. It is about what the defendant intends by carrying out his act.

Section 11 of the Fraud Act 2006 sets out the offence:

1. A person is guilty of an offence under this section if he obtains services for himself or
another -
a) by a dishonest act
b) in breach of subsection (2)

2. A person obtains services in breach of this subsection if -
a) they are made available in the basis that payments has been , is being or will be made for or in respect of them,
b)he obtains them without any payment having been made for in respect of them or without payment having been made in full, and
c) when he obtains them he knows -
      i) that they are being made available on the basis described in paragraph (a), or
      ii) that they might be,

but intends that payment will not be made, or will not be made in full.

This offence is a result crime as there must be proof that the services have actually been obtained.No act of deception is needed, and there is no need to prove that the service provider has been decieved. An example would be climbing a wall to see a football match. This would be accessing a service (the football match, entertainment) that is normally provided only on payment of a fee (the ticket price).

The offence can be committed where the person performing the act does not need to do so for his own benefit. This could therefore include lifting someone over a fence to get into a music festival.

The offence applies to services that are ‘made available on the basis that payment has been, is being or will be made for or in respect of them’. This means that where a service is being provided without charge, there cannot be an offence under this section. The word ‘services’ is not defined in the Act but the CPS gave a number of examples that would fall within the section:

1. Obtains chargeable data or software over the internet without paying (music, video)
2. Orders a meal knowing he has no means of paying
3. Attaches a decoder to his TV to enable him access chargeable satellite services without               paying
4. Uses the services of members’ club without paying and without being a member

The case of Sofroniou 2004 covers cases with respect to banking services. The defendant falsely pretended to be several people in an attempt to deceive banks into providing him with services and providing him with credit cards, and retailers into providing him with goods. The Court of Appeal decided that for there to be a service, interest must be payable on loans and credit cards, and they could not be ‘interest free’.  The defendant was guilty of obtaining services by deception under the previous law. Under the current law, if banking services obtained are free, s11 cannot be the appropriate offence. 

This uses the Ghosh test similar to s2.

1. Would the defendant’s behaviour be regarded as dishonest by the standards of reasonable and honest people? (if the answer is no then the defendant is not guilty)

2. Was the defendant aware that his conduct would be regarded as dishonest by reasonable and honest people?

The first part of the test is objective and the second part of the test is subjective. If both parts of the test are satisfied, the defendant fulfils the criteria for being dishonest.

Knowing the services are made available in the basis that payments has been , is being or will be made for or in respect of them:

Usually awareness that a service necessitates payment will not be a problem as it is self-evident that the service is one for which payment is normally made – either in advance, at the time or after the service. The defendant must get the services either by not paying for it, or not paying in full, if there is to be a conviction under s11.

Avoids or intends to avoid payment in full or in part:

The defendant must intend to avoid payment for the service provided in full or in part, and have that intention at the same time that the service is obtained. Presumably, with banking service, this is a continuing act and so a later intention, whilst the service continues, will be sufficient. It would appear that the intent must be never to pay the sum involved. This means that an honest belief that credit is being given will mean the offence is not being committed. This would be consistent with the existing law with respect to making off without payment, and with the case of Allen 1985.

• Allen 1985 – intent not to pay means an intent not to pay permanently, so a mistaken but honest belief as to credit being given will mean the offence has not been committed. 

The House of Lords stated:
"Anyone who knows that payment on the spot is expected or required of him and who then dishonestly makes off without payment as required or expected must have at least the intention to delay or defer payment. It follows, therefore, that the conjoined phrase 'and intent to avoid payment of the amount due' adds further ingredient - an intention to do more than delay or defer - an intention to evade payment altogether"

The offence of making off without payment is defined in the Theft Act 1978 s3 as:

1. Subject to subsection (3) below, a person who, knowing that payment on the spot for any goods supplied or service done is required or expected from him, dishonestly makes off with without having paid as required or expected and with intent to avoid payment of the amount due shall be guilty of an offence.
2. For purposes of this section ‘payment on the spot’ includes payment at the time of collecting goods on which work has been done or in respect of which service has been provided.
3. Subsection (1) above shall not apply where the supply of the goods or the doing of the service is contrary to law, or where the service done is such that payment is not legally enforceable.

This has the following elements: • Goods supplied or services done (Actus Reus) • Makes off from the spot (Actus Reus) • Fails to pay on the spot as required or expected (Actus Reus) • Dishonesty (Mens Rea) • Knows that payment on the spot is required or expected (Mens Rea) • Intention to avoid payment permanently (Mens Rea)

Goods must be supplied which means that the goods must be delivered to the defendant or the defendant being allowed to take the goods – as at a petrol station or from a self-service shop. Where services are involved, services must be done. This is includes renting a car, supplying a meal and repairing a bicycle. In Troughton 1987, the defendant,  who was drunk, called a taxi to take him home. He didn’t give the driver his exact address and when the taxi driver couldn’t get the details of the location he drove him to the police station. When he stopped the defendant ran off without paying.
If the service – in this case the taxi journey – has not been completed then there will not be any liability to pay (as the defendant hadn’t been taken home, there was no liability to pay).

Making off is just one of departing. The defendant need not be running away or surreptitiously leaving when no one is looking. The important thing is that the departure is dishonest. This is seen in the case of Brooks and Brooks 1983 where it was said the words ‘dishonestly makes off’ are words easily understandable by any jury. In that case, the defendantd had a meal in the upstairs room of a restaurant. The defendant left in a hurry and the second defendant attempted to leave as well but was caught by the manager.

The expression ‘making off’ is to be interpreted simply as departing; what is important is not the manner in which the defendant departs, but whether he does so dishonestly. In McDavitt 1981 it was decided ‘making off’ refers to ‘a departure from the spot where payment is required or expected’; where the spot is, is a matter for the jury to decide, depending on the circumstances.

Fails to pay on the spot as required or expected:

The key point is that the departure is made without paying as required or expected. This, therefore, depends on the normal relationship between the defendant and the victim. In Vincent 2001 the defendant stayed at two hotels and agreed to pay the hotel at a later date, so there was no longer an expectation for payment to be made on the spot, and he was not guilty of making off without payment.

However, though he may not be guilty of this offence, there is the possibility of an offence under the Fraud Act 2006 if he was dihonest about his intention to pay in the future.

Dishonesty:

The test is the Ghosh test, thus, a defendant who honestly believed he had been given credit for the good supplied or service done would not be guilty.

Knows that payment on the spot is required or expected:

In most situations, it is standard practice to pay on the spot, and it will be difficult for a defendant to argue otherwise. However, if a defendant genuinely did not know that payment on the spot is required, he will not be guilty of an offence.

Intention to avoid payment permanently:

Here the intent must be never pay the sum involved. This means that an honest belief that credit is being given will mean the offence is not being committed.