Fraud: Historical and Contemporary Perspectives

Prior to the Fraud Act 2006

Before the Fraud Act 2006, fraud was primarily governed by a series of deception offences under different statutes, such as Section 15 of the Theft Act 1968. This approach faced significant issues:

1. Obtaining Property 'By' Deception:

◦ Problem: The requirement to show that property was obtained 'by' deception often led to difficulties in establishing a direct link between the deception and the property obtained. For instance, if a builder performed minimal work but charged a large amount, it was challenging to prove that the deception directly led to the obtaining of property.

2. Proof of Deception:

◦ Problem: Establishing whether an act constituted deception was problematic. For example, if someone placed a plastic replica coin into a parking meter, it was unclear whether this constituted deception or merely evasion of liability.

Cases Illustrating Pre-2006 Fraud Issues:

• Lambie (1982):

◦ Facts: The defendant used a stolen credit card to purchase goods, aware that authorisation had been withdrawn.

◦ Held: Convicted of fraud, as the use of the stolen credit card constituted obtaining property by deception.

• Cooke (1986):

◦ Facts: A rail employee made and sold his own sandwiches on a train, believing he could make better sandwiches than those provided by British Rail.

◦ Held: Convicted of fraud for obtaining money from customers by deception, even though the deception was about the quality of the sandwiches.

• Hensler (1870):

◦ Facts: The defendant sent a begging letter pretending to be a poor person to a priest, who knew the defendant’s true identity but still sent money.

◦ Held: The defendant was charged but did not obtain property by the deception, as the priest was aware of the deception.

Fraud Act 2006

The Fraud Act 2006 introduced a unified approach to fraud, focusing on the conduct of the defendant rather than the victim’s perspective. It does not require particular consequences, making it a specific intent offence. The Act defines fraud through three key offences:

1. False Representation (S.2):

◦ Definition: A representation is false if it is 'untrue and misleading.'

◦ Intentions: To make a gain, cause loss, or expose another to a risk of loss.

◦ Mixed Conduct and Fault: It requires both a conduct element (making a false representation) and a fault element (intention to gain or cause loss).

◦ Augunas (2013): The defendant must know that the representation might be untrue, indicating a subjective test for knowing the representation's falsity.

◦ Barnard (1837): Dressing in Oxford University attire to obtain a discount was deemed a false representation.

◦ Jeevarajah (2012): Defendants who falsely told a lottery winner that their ticket was a loser were found guilty of fraud under the 2006 Act, illustrating the shift from previous laws.

2. Failing to Disclose Information (S.3):

◦ Condition: Applicable when there is a legal duty to disclose information.

◦ Daley (2010): Failure to disclose criminal convictions when applying for a job suggests a strict liability regarding the existence of a duty.

3. Abuse of Position (S.4):

◦ Scope: Applies to individuals in positions of trust, such as trustees or those with fiduciary duties.

◦ R v Gayle (2008): An airport manager accepted money to allow a crate to be placed on a plane, which was charged as fraud, though it could have been bribery or corruption

Issues and Criticisms

• Wide Scope:

◦ The 2006 Act is criticised for being very broad. Dishonesty as a concept lacks clear boundaries, making it challenging to determine what constitutes fraudulent behaviour. For example, falsely claiming inability to pay a debt could be seen as making a false representation, even if not objectively dishonest.

• Failure to Disclose Information:

◦ The requirement to disclose information only applies when there is a legal obligation to do so. This has led to concerns about potential strict liability in proving the existence of such duties.

• Abuse of Position:

◦ The Act applies to a wide range of fiduciary relationships, potentially broadening the scope of what constitutes fraud.

• Comparison to Manslaughter:

◦ The approach to fraud under the 2006 Act is seen as a departure from result-based offences like manslaughter. It focuses more on the conduct and intent of the defendant rather than the consequences of their actions.

• Gallasso (1993):

◦ Facts: A nurse misappropriated cheques she was trusted with.

◦ Held: The court held that she was not guilty of theft due to an objective test for appropriation, highlighting the challenges of applying fraud principles.

• Law Commission 2002:

◦ Suggested that fraud should involve acting 'dishonestly and secretly,' which would imply a need for manifest criminality.

• Subjective vs. Objective Theories:

◦ Ormerod: Criticised the Act for shifting focus from a result-based approach to a conduct-based approach, questioning whether it criminalises lying itself.

• Overlaps with Theft:

◦ Fraud and theft overlap, with fraud potentially leading to broader interpretations and lesser minimum sentences compared to theft.

Recent Developments

• New Criminal Offence (2023): A new offence of failing to prevent fraud applies to large businesses and organisations, reflecting ongoing changes in the regulatory landscape.

In summary, the Fraud Act 2006 represents a significant shift from previous laws, focusing on conduct and intent rather than specific consequences. While it simplifies and unifies fraud offences, it has also introduced new challenges in defining and proving fraud, leading to ongoing debate and criticism.