â€˜The Fraud Act 2006 has as a central requirement the concept of Dishonesty. This simple legal concept has made the law clear.â€™ Critically Discuss.
The Fraud Act 2006 was brought in to replace the Theft Act 1978, as offences created under the act after caused difficulty proving in court. In 2002, the Law Commission produced a report on fraud, which led to the creation of the new act, which has been simplified, which allows the defendant to understand the offences with ease and for the Crown Court the changes made it easier to prosecute. Most of the previous act has now been repealed, excluding â€˜making off without paymentâ€™
under section 3, which has not been affected. Certain aspects of the previous Theft Act still remain; common law offences such as, â€˜conspiracy to defraudâ€™
and â€˜conspiracy to cheat the revenueâ€™.
The main change brought to the new act was section 1 of a single offence of fraud, as the act gives a statutory definition of the offence of fraud; separating it into three categories, subsequently meaning that it is a single offence which can be committed in three different ways:
- Fraud by false representation (section 2)
An example of this offence would be Adams, R v (1993) CA; The individual went to hire a car and filled in a car hire form, he was asked if he had any previous motoring convictions and also whether he has been disqualified from driving, he said â€˜noâ€™ to both, however he had been disqualified from driving 4 years previously. The indidual was found guilty as he should have only ticked the boxes if both answers were no, the indivual tried to argue that it was the correct answer to one of the questions, therefore he falsly represented himself.
- Fraud by failing to disclose information (section 3)
An example of this would be for an individual not disclosing important information when applying for life insurance such as they have a life threatening illness.
- Fraud by abuse of position (section 4)
An example of this would be a carer stealing money or goods from their patients, as the carer was in a position of trust, in which the system relies upon honesty on the part of caring for someone who canâ€™t care for themselves. The main focus of the new legislation brought in was to ensure that newly developed technolgically focused crime was included within the provision as previously the complexity under fraud was prosecuted, enabled some defendants to be acquitted as the legilslation failed to keep up with technological advances. This change was brought in to overcome these technicalities, by capturing the elements of fraud, however doing so in a technique which doesnâ€™t specify any specific activity. This broadness allows the reformed legislation to keep up to date with developing technologies, therefore meaning that technology cant out date the legislation like previously. A post legislative assessment of the newly reformed Fraud Act 2006 was carried out and comments made were that the act simplified cases of fraud, that the simplicity of the law allows investigators to â€˜take prompt action and avoid further criminalityâ€™.
The broader range of offences which are now covered by the act, means that the prosecution no longer have to prove that a person was decieved and also allows the means to prosecute for a wider range of criminal activities including technology focused crime, investment fraud, data theft and charity scams. Offences are now based upon the â€˜intentionâ€™of the defendant, rather than the outcome, which has increased the amount of early guily pleas. The overall assessment suggested that the reformly reformed legislation has been successful in acheving its initial objectives, which were to modernisedeception offences, whilst also providing a clear statutory base for fraud offences, whilst also targetting complex and technology focused fraud. There are still offences being prosecuted under the previous legislation due to the implementation date of the Act and the long investigate periods that often occur in complex fraud cases. The principles that are carried out are the same although the legal tests may be differ. The common law offence of conspiracy to defraud must be mentioned, however, as it still exists despite the Fraud Act 2006. The Element of Dishonesty
The changes brought in move the focus of the legislation from the concept of deception towards the concept of dishonesty, as defined in R v Ghosh (1982) when dishonesty is an element of the offence, the jury have to make a decision whether or not they feel that what was done dishonest by the ordinary standards of reasonable and honest people? And whether the defendant realised that he/she was doing, by those standards dishonest? After the removal of the concept of deception from the offence of fraud â€˜dishonestly obtaining services by deceptionâ€™ (section 1 of the Theft Act 1968); with â€˜obtaining services dishonestlyâ€™(section 11 of the Fraud Act 2006), this allows a larger scope of crime to be captured through the word â€˜dishonestlyâ€™, as it is a word which can easily be related to and understood by laymen. Section 11 of the Act make it a statutory offence to obtain services dishonestly; suggesting that if services which were to be paid for were obtained without payment, under the knowledge of the individual or with intention that no payment would be made, If found guilty the individual would be liable to a fine or imprisonment for up to twelve months on a summary conviction, or a fine or imprisonment for up to five years on conviction on indictment. The decision of whether an action is dishonest remains separate from any moral justifications the act has. For instance if an individual stole from someone wealthy, and he knew that he was acting dishonestly, however his argument was that he was morally justified in acting in that particular way, and could only be brought to court by the way of mitigation of sentencing, and would not have affected the inference of dishonesty. The new legislation means that dishonesty is looked at through omission rather than the act, for instance if a creditor were to use trickory to get a debtor to pay a debt which they owed, as the motive was dishonest even though the debtor owed the creditor and by means it was rightfully his money, the creditor could potentially be prosecuted under the new provisions of the act, however under the previous law this would have been lawfull. The broad nature of the statute and reformed language now allows a broader range of offences to be under the provisions of the reformed act; however as the legislation of the act is broad this could potentially lead to problems. As the more complex a system is the harder it is to prosecute under, however if it is broader this creates more room for loop holes to be created. The nature and definition of dishonesty under the Ghosh test, is left under the discretion of the jury to decide whether an act is dishonest and if the act fails to address whether something is dishonest it automatically becomes classified as â€˜fraudâ€™. However the argument with this issue falls upon whether or not the jury are â€˜reasonableâ€™ with their estimations of dishonesty, different life backgrounds and job roles can influence what an individual sees as a dishonest act. Leister 1974 said, â€˜that it cannot be rational to trust, twelve strangers of unknown qualityâ€™.
The act does not in fact provide a definition of fraud, and is general in terms, which could potentially mean that criminal liability is extended. Section 2 of the reformed act is the most broadest in terms, suggesting that if a false representation was created within an email, and was intended to be sent, however was caught in the tracks, the individual would still have the â€˜intentionâ€™, therefore would be guilty of the full offence. Another broadness issue would be for the provision of â€˜unintentional falsityâ€™,
section 2(2), states that a statement would be considered as false if it is â€˜untrueâ€™ and â€˜misleadingâ€™, however if an auction house where to sell an item as an original piece, however later on find out that it is a forged piece and the auction house believed at the time that it was the original, but in their industry was aware of the possibility of these types of happenings, they would be guilty under section 1 under the new legislation. However such cases should be let off due to diligence of the jury, allowing the fact that they believe the auction house were in fact unaware of the dishonesty, with the Ghosh test. The Crown Prosecution Service and the Serious Fraud Office have considered that the new changes to the legislation have been beneficial as they have reduced the scope for legal argument and appeals on technicalities. The legal concept of the fraud act being centred with the requirement of dishonest has is some cases made the law clear, in the sense that the term, â€˜dishonestâ€™ is easily relatable, and the term incriminates anyone who is to act upon dishonesty. However as there is no set in stone definition of dishonesty, it is left up to the discretion of the jury to decide what is and what is not dishonest. This assessment method suggests that the juryâ€™s opinion will uphold higher in court over morality and the criminal law, which therefore destroys â€˜the protection against laws which the ordinary man may regard as harsh and oppressiveâ€™.
In terms of making the law clear, it has allowed the Fraud Act to be more concise and easily understandable; allowing individuals to be more accountable for their actions with language spoken within the law such as â€˜dishonestyâ€™ however it also has its negatives as previously mentioned, the path of the case is in the juryâ€™s hands, which may not always be decent. Bibliography
The Law Commision, 'The Law Commision - Fraud' [July 2002] TLCF 1, 5,6,7,8,9 Fraud Act 2006 2006 s 1,2,3,4,5,6,7()() Serious Fraud Office, 'Abuse of Position' (Serious Fraud Office 2014) <http://www.sfo.gov.uk/fraud/fraud-in-your-organisation/abuse-of-position.aspx>
accessed 24th March 2014 CPS, 'The Fraud Act 2006' (CPS 2014) <http://www.cps.gov.uk/legal/d_to_g/fraud_act/>
accessed 25th March 2014 Farlex, 'Dishonesty' (The free dictionary 2014) <http://www.thefreedictionary.com/dishonesty>
accessed 26th March 2014 M Johnson, 'The Fraud Act 2006; The E Crime Prosecutors champion or the creator of new inchoate offence?'  TFA 1, 188.8.131.52.5.6. L. Shu, F. Gino, M. Bazerman, 'Dishonest Deed, Clear Conscience: Self - Preservation through Moral Disengagement and Motivated Forgetting'  DDCD 2, 2,3,4,5,6,78 Willis and Bowring, 'Fraud and dishonesty offences' (Willis and Bowring April 2012) <http://www.willisbowring.com.au/newsletters/criminal-law-newsletter-archive/fraud-and-dishonesty-offences.aspx>
accessed 26th March 2014 University of Hertfordshire Higher Education Corporation, 'FRAUD AND CORRUPTION - ANTI-FRAUD AND ANTI-CORRUPTION POLICY' [February 2007] AF&AC 1, 1,2 BBC News, 'What is the Ghosh test for dishonesty?' (BBC News September 2009) <news.bbc.co.uk/1/hi/magazine/8242050.stm> accessed 27th March 2014 Ministry of Justice, 'Post legislative assessment of the Fraud ACt 2006' [June 2012] PLAFA2006 3, 3,4,5,6,7,8,9 1