This is a twenty page report detailing the financial collapse of Carillion plc in 2018, and while this independent report explains much of the background leading up to their downfall, it also includes judicial insight into the rights of those left out of pocket when the hammer finally fell (simply click here to read it).
Finding effect through the inception of the Fraud Act 2006 there are three means by which fraud can occur; namely fraud by false representation, failure to disclose information and by abuse of position. Here we shall look at each one respectively and support with suitable cases where applicable.
Fraud by False Representation
S.2(1) of the Fraud Act clearly states that a person is guilty of fraud by false representation when it is proven that they did so to (i) cause gain for themselves or another party or (ii) cause or expose another person to loss or a risk of loss (this can be achieved in a number of ways and so oral and written methodology equally apply). This was demonstrated inR v Lambie in which a consumer continued to use her credit card despite exceeding her credit limit and after being asked by the bank to return it.
When carrying out a purchase in a Mothercare store the appellant in the appeal case was accused by the defedant of knowingly encouraging a transaction in the knowledge that the bank had no longer given the respondent authority to continue using the card. This argument was stringently dismissed while emphasis was placed squarely upon the intention of the respondent to knowingly defraud the store. An illustration of fraud by false representation was summed up by Lord Roskill who explained:
“[I]t is in my view clear that the representation arising from the presentation of a credit card has nothing to do with the respondent’s credit standing at the bank but is a representation of actual authority to make the contract with, in this case, Mothercare on the bank’s behalf that the bank will honour the voucher upon presentation.”
This ethos was also outlined in Rex v Sullivan where Humphreys J stressed:
“[T]he facts are such that it is patent that there was only one reason which anybody could suggest for the person alleged to have been defrauded parting with his money, and that is the false pretence, if it was a false pretence.”
Fraud by Failure to Disclose Information
Subject to s.3 of the Fraud Act a person dishonestly failing to disclose information when (i) under a legal duty to so and (ii) by intention gains for themselves or another or causes or exposes another to a loss or risk of loss is thus guilty (where proven) of fraud.
As this relates more to those in public body roles or parties to contract, the establishment of guilt falls to the judicial interpretation of civil law and statute as opposed to the collective opinion of a jury. An example of this R v Padellec in which a man accused of harbouring indecent images on his computer refused to disclose the encryption password as required under s.53 of the Regulation of Investigatory Powers Act 2000. After being summarily convicted the appellant appealed under plea in order to reduce his sentence at which point Singh J exclaimed:
“The whole point of requiring access is so that it can be seen what was in fact there. We express the hope that in a situation such as arose in this case, and in the context of an offence under the Regulation of Investigatory Powers Act (section 53), there will never again be a basis of plea accepted which is based upon keeping the contents secret and the defendant saying, to his advantage, what was or was not contained.”
Fraud by Abuse of Position
S.4(1) of the Fraud Act convicts those (again where proven) for gainful abuse of a position held to safeguard and preserve the financial interests of another. The gain can be both personal or on behalf of third party(s) while such profits must cause (or expose those assigned protection) loss or risk of loss.
Given the nature of the breach it is typically applied to fiduciary or professional relationships where trust has been given under express conditions, however it could just as easily apply to family matters depending upon the relationship shared and the declarations made. As with fraud by failure to disclose information the judgments are typically free from jury persuasion and will benefit from equitable principles as much as civil laws for guidance.
An example of this was found in R v Conway (Catherine) in which a domestic care worker abused the trust placed in her by her client by obtaining and then keeping the victim’s debit card before defrauding her of £27,000 over a period of three years. Once caught and convicted, the defendant then accused the victim’s family members of conspiring to the fraud before admitting full liability. When passing sentence, Weir LJ illustrated the gravity of the abuse when he said:
“This was the calculated and systematic theft over years of a vulnerable lady’s life savings by the very person employed to assist and befriend her at a time in her life when she was at a low ebb and grateful for the help which this appellant cynically pretended to be giving her by buying her a few necessaries using her post office savings card.”