Criminal Law (2014): Fraud

Discuss Wayne's potential liability under the Fraud Act 2006 in each of the following scenarios.
Do NOT discuss Wayne's liability for theft.

i. Wayne, desperate for the lavatory, goes into a private members’ club of which he is not a member. He winks at the doorman who assumes that he is a member and lets him through. Wayne uses the lavatory and, having washed his hands with the soap provided, leaves the club.

ii. Eve goes into Rustbucket Cars and asks to see some low mileage second hand cars. One attracts her particularly and she asks Wayne, the salesperson, ‘How many miles does this car do to the gallon?’ ‘60’, says Wayne although he knows that the fuel consumption is only 60 miles per gallon for motorway driving and only 35 miles per gallon under average conditions.

iii. Paul, an art dealer, sees Wayne's painting and, hoping for a bargain, offers Wayne $1m for it. Wayne realises that Paul thinks the painting is by the famous painter John Constable. In fact it was painted by Constable’s sister and is worth no more than $1,000. Wayne accepts Paul's offer.

iv. Wayne advertises his car for sale saying, 'BMW for sale. One year old. One careful owner, £25,000.' Sally comes to view the car and checks the mileage on the odometer which shows a recorded reading of 10,000 miles. On that basis she buys the car. In fact the car had done 110,000 miles but the odometer reading was faulty. Although Wayne was not responsible for the faulty reading he was aware of it. The car would be worth £25,000 if the reading was correct but in fact it is worth only £20,000 with its true mileage.

General remarks
This question on fraud is designed to test your understanding of what counts as a representation, what makes it false, when silence can amount to a representation and when silence can amount to fraud ven where it does not amount to a representation.

Common errors
Failing to identify in each case the precise representation made and analysing why, if at all, it is false.
A good answer to this question would… include the following indicative elements.

• Section 2 Fraud Act issues.
• Does he by walking in and winking impliedly by conduct represent he is a member?
• Does he intend to make a gain/cause a loss? Fraud refers only to money or property. The only property involved is soap and water.
• Dishonesty – Ghosh.
  Section 11 Fraud Act issues.
• The services must be made available on the basis that payment has been, is being or will be made for or in respect of them. Does this (payment) include a membership subscription?
• Dishonesty.
• Section 2 Fraud Act issues.
• Falsity of the representation.
• Candidates should identify the misrepresentation as misleading, and that
• Adam knows that it is, or might be, untrue or misleading.
• Section 2 Fraud Act issues.
• Has Adam made a representation concerning the authorship of the painting? His silence will not constitute such a representation unless possibly:
• he is a dealer or acknowledged expert, particularly if the painting is in his shop and all the other paintings therein are by ‘acknowledged masters’. This may be an implied representation by conduct. The representation being that all the paintings in my shop are by acknowledged masters. Of course, if the painting was priced at a low figure no such implied representation would arise.
• it cannot be argued that Adam's knowledge relative to that of Paul places Paul in a position of reliance on him which a failure to discharge will amount to a representation. Indicative cases are Silverman/Greig.
• Section 4 (fraud by abuse of position) probably cannot apply for the above reasons.
• An issue also arises as to whether s.3 (failure to disclose) applies. Candidates should point out that this requires a legal rather than a moral duty and that, in the absence of a relationship of trust, one probably does not exist.
• Dishonesty – Ghosh.
• The advertisement may be accurate but is it misleading in the sense that it is only a half truth? It may be argued that he is representing more than meets the eye. Although silence does not amount to a representation it may make a representation misleading because of the overall context. The context includes the price. It may be argued that by pricing the car at 25k he is impliedly representing that the car's mileage is as the odometer states.

Poor answers to this question…
tended to avoid grappling with the issue of whether a representation had been made and whether it was false and concentrated in each case on s.3. Section 3 is peripheral at best when a false  representation has actually been made and it is not worth wasting time over unless, in cases of non-disclosure, there is a clear legal obligation to disclose.