Fraud offences - Fraud by false representation

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Overview

Fraud by false representation, a key element of the Fraud Act 2006, is vital for SQE1 FLK2 exam candidates. Defined under Section 2, it marks a change in fraud prosecution, emphasizing the offender's conduct. Understanding this concept is crucial for future legal professionals due to its broad applications across sectors. This guide explores the legal framework, elements, case law, and practical uses of fraud by false representation, equipping you with the skills needed to succeed in the SQE1 FLK2 exam.

Legal Framework and Context

Statutory Basis

The Fraud Act 2006 transformed the approach to fraud offences in England and Wales. Section 2 replaced several deception offences under the Theft Act 1968 and 1978, bringing clarity and adaptability to modern fraud cases.

Key features include:

  1. Emphasis on the defendant's actions rather than the victim's response
  2. Elimination of the requirement to prove actual deception
  3. Broad definition of 'representation' covering various forms of communication
Definition and Scope

Fraud by false representation involves:

  1. Dishonestly making a false statement
  2. Intending to gain something or cause a loss

The scope intentionally covers representations about:

  • Facts or law
  • The offender's mindset
  • Another's mindset

This wide interpretation addresses a range of fraudulent activities, from simple lies to complex schemes.

Key Elements of the Offence

Actus Reus

The actus reus involves making a false statement. This breaks down into:

  1. Making a statement
  2. The statement being false
Making a Statement

A statement can be made:

  • Explicitly (verbally or in writing)
  • Implicitly (through actions)

Example: In R v Silverman (1988), presenting a cheque implied it would be honored.

Falsity of the Statement

The statement must be objectively false. Misleading or misunderstood statements are insufficient.

Example: In R v Wheatley (1979), claiming a car had "one careful owner" was false with two previous owners.

Mens Rea

The mens rea consists of:

  1. Knowledge that the statement might be untrue
  2. Dishonesty
  3. Intention to gain or cause loss
Knowledge

The defendant must know the statement might be untrue. Recklessness suffices.

Dishonesty

Clarified in Ivey v Genting Casinos [2017] UKSC 67, the test involves:

  1. Knowing or believing the facts
  2. Judging honesty by ordinary standards

This objective test excludes the need for the defendant’s appreciation of dishonesty.

Intention

There must be intent to gain or cause loss. Actual gain or loss need not occur.

Case Law and Legal Interpretations

Landmark Cases

  1. Ivey v Genting Casinos [2017] UKSC 67

    • Impact: Simplified fraud prosecution by removing subjective elements

  2. R v Hornsby [2018] EWCA Crim 674

    • Emphasized that fraud is complete upon making the false representation

  3. R v Bains [2019] EWCA Crim 1277

    • Clarified that representation need only contribute to the victim's actions
Interpreting 'Representation'

Courts interpret 'representation' broadly, including:

  • Verbal, written, electronic, and implied communication

In R v Flintham [2011] EWCA Crim 501, using a credit card implied authority to use it.

Practical Applications and Examples

Financial Services

In finance, fraud by false representation can appear as:

  1. Investment fraud: Misleading about investments
  2. Insurance fraud: False claims or information
  3. Mortgage fraud: False data on applications

Example: Misrepresenting investment products to clients could result in charges.

E-commerce and Digital Transactions

Fraud in digital contexts can include:

  1. Misrepresented goods in online marketplaces
  2. Phishing: Impersonating entities for information
  3. Cryptocurrency scams

Example: A fake online store with false reviews is prosecutable for fraud.

Professional Services

Fraud occurs in professional contexts through:

  1. False qualifications
  2. Misstated experience
  3. Billing fraud

Example: Falsely claiming qualifications to secure contracts is fraud by false representation.

Defenses and Mitigating Factors

Proving fraud is critical, but defenses exist:

  1. Lack of Dishonesty: Arguing honesty in belief
  2. Lack of Intent: Showing belief in truth or non-fraudulent motives
  3. Lack of Causation: Proving the loss was unrelated to the false statement

Exam Preparation Strategies

For the SQE1 FLK2 exam, candidates should:

  1. Identify the false statement
  2. Assess the defendant's knowledge of its truth
  3. Apply the Ivey test for dishonesty
  4. Determine intent to gain or cause loss
  5. Consider possible defenses

Remember, the offence is complete upon making the false statement, regardless of any resultant gain or loss.

Conclusion

Fraud by false representation under the Fraud Act 2006 is a critical area in prosecuting fraud offences. Its focus on conduct and the broad definition of 'representation' makes it adaptable to various fraudulent behaviors. A thorough understanding of this offence, its elements, case law, and real-world applications is essential for SQE1 FLK2 candidates.