One gap in the law was highlighted in the case of Freddy (1996) 3 All ER 481 where the defendants made false representations in order to obtain a number of mortgage advances from building societies to purchase houses. They intended to repay the mortgages when they sold the houses, as they hoped, at a profit. The mortgage advances were in the form of money transfers. The House of Lords quashed Ds’ convictions on the basis that no property belonging to another had been obtained. As a result of this decision a further amendment was made to the Theft Act 1968 by the Theft (Amendment) Act 1996. This inserted an extra section (s 15A) into the Theft Act 1968 creating the offence of obtaining a money transfer by deception.

This showed a gap in the law, although in later cases the courts became inventive in finding that V had acted as the result of the particular deception. This was seen in Lambie (1981) 2 All ER 776.

CASE EXAMPLE

Lambie (1981) 2 All ER 776

D had a credit card (Barclaycard) with a £200 limit. She exceeded this limit and the bank which had issued the card wrote asking her to return the card. She agreed that she would return the card, but she did not do so. She then purchased goods in a Mothercare shop with the card. She was convicted of obtaining a pecuniary advantage by deception, contrary to s 16(1) of the Theft Act 1968. The departmental manager in Mothercare made it plain that she made no assumption about the defendant’s credit standing at the bank. Provided the signature matched that on the card and the card was not on a ‘stop list’ the manager would hand over the goods.

Because of this the Court of Appeal allowed her appeal as the deception had not been the cause of the obtaining, but the House of Lords reinstated the conviction. The Law Lords held that it was not necessary to have direct evidence of the reliance on a particular deception if the facts were 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’. They thought that in the case of credit cards it would make the law unworkable if there had to be direct evidence that the deception induced the obtaining in every case.

Another problem arose where the deception was made to a machine so that no human person had been deceived. The Law Commission in their Report Fraud (2002) (Law Com No 276) explained this problem:

QUOTATION

‘3.34 A machine has no mind, so it cannot believe a proposition to be true or false, and therefore cannot be deceived. A person who dishonestly obtains a benefit by giving false information to a computer or machine is not guilty of any deception offence. Where the benefit obtained is property, he or she will normally be guilty of theft, but where it is something other than property (such as a service), there may be no offence at all.’

This was becoming an increasingly important gap in the law as the Law Commission went on to point out in the next paragraph of the Report:

QUOTATION

‘3.35 This has only become a problem in recent years, as businesses make more use of machines as an interface with their customers. There are now many services available to the public which will usually be paid for via a machine. For example, one would usually pay an internet service provider by entering one’s credit card details on its website. Using card details to pay for such a service without the requisite authority would not currently constitute an offence. As the use of the internet and automated call centres expands, this gap in the law will be increasingly indefensible.’

A representation as to state of mind covers such matters as a customer saying they will pay their bill when they have no intention of doing so.

Express representations

The Act also states that a representation may be express or implied (s 2(4)). For an express representation, the Explanatory Notes to the Act make it clear that there is no limit on the way in which the representation must be expressed. The notes point out that it could, for example, be written or spoken or posted on a website.

The Explanatory Notes to the Act also point out that the offence can be committed by ‘phishing’ on the Internet. That is where a person sends out an email to a large number of people falsely representing that the email has been sent by a legitimate bank. The email asks the receiver to provide information such as credit card and bank numbers so that the ‘phisher’ can gain access to others’ assets.

There have been no cases appealed on substantial points of law, but there have been appeals on sentencing in cases charged under the Fraud Act. These cases give examples of the type of conduct charged under s 2 and two examples are given below.

CASE EXAMPLE

Hamilton (2008) EWCA Crim 2518

V’s son had bought some new fence panels for V’s garden, but as they had turned out to be the wrong size he left them leaning up against the side of the house until such time as he was able to replace them. D and his brother called at V’s house claiming that they had come to collect payment for the panels. In fact, the victim’s son had already paid for them in full. D told V that once that sum was paid they would arrange for replacement panels to be delivered. V paid them £60.

This is clearly an express representation as D told V the panels had not been paid for when they had. Another case where there was an express representation was Cleps (2009).

CASE EXAMPLE

Cleps (2009) EWCA Crim 894

D went to a building society and falsely claimed to be George Roper. He opened a Liquid Gold account in the name of George Roper. Two days later D returned to the same branch. He produced a passport in the name of George Roper and the passbook for the Liquid Gold account as identification. He asked to close a Guarantee Reserve account (held by the real George Roper) and had the £181, 950 in that account transferred into the Liquid Gold account. He then obtained a banker’s draft for that amount.

The representation that he was George Roper was an express representation.

There are many ways in which it is possible to make an implied representation through one’s conduct. This was shown by the old case of Barnard (1837) 7 C & P 784.

CASE EXAMPLE

Barnard (1837) 7 C & P 784

D went into a shop in Oxford wearing the cap and gown of a fellow commoner of the university. He also said he was a fellow commoner and as a result the shopkeeper agreed to sell him goods on credit. The court said, obiter, that he would have been guilty even if he had said nothing. The wearing of the cap and gown was itself a false pretence.

In fact the case of Barnard demonstrates both an implied representation and an express representation. The wearing of the cap and gown was an implied representation while the statement that he was a fellow commoner was an express representation.

A more modern example of an implied representation would be standing on a street corner with a collecting box labelled ‘Guide Dogs for the Blind’. This is implying that D is collecting on behalf of the charity. If D intends to pocket the money then he is guilty of an offence under s 2 of the Fraud Act 2006.

Although there is no definition of what is meant by implied false representation by conduct in the Fraud Act, the Explanatory Notes to the Act state that:

QUOTATION

‘An example of a representation by conduct is where a person dishonestly misuses a credit card to pay for items. By tendering the card, he is falsely representing that he has the authority to use it.’

CASE EXAMPLE

DPP v Ray (1973) 3 All ER 131

D went to a restaurant with three friends. He did not have enough money to pay for a meal but one of his friends agreed to lend him enough to pay for the meal. After eating the meal they all decided not to pay for it. Ten minutes later when the waiter went into the kitchen all four ran out of the restaurant without paying. The Court of Appeal had quashed the defendant’s conviction for obtaining a pecuniary advantage under s 16(2)(a) of the Theft Act 1968 (this section has now been repealed). The House of Lords reinstated the conviction. The problem was whether the defendant could be guilty when his original representation that he would pay was genuine. Did the change of mind produce a deception? The House of Lords held that it did.

Paying by cheque

CASE EXAMPLE

Gilmartin (1983) 1 All ER 829

D, a stationer, paid for supplies with post-dated cheques which he knew would not be met. This was held to be a deception. By drawing the cheques he was representing that there would be funds in the account to meet the cheques on the dates they were due to be presented.

Use of a cheque guarantee card

CASE EXAMPLE

Metropolitan Police Commander v Charles (1976) 3 All ER 112

D had a bank account with an overdraft facility of £100. The bank had issued him a cheque card which guaranteed that any cheques he wrote up to £30 would be honoured by the bank. D wrote out 25 cheques for £30 in order to buy gaming chips and backed each cheque with the cheque card. He knew that the bank would have to pay the gambling club the money so there was no deception in respect of the fact that the cheques would be honoured. However, he knew that he did not have enough money in his account to meet the cheques and also that the amount would exceed his overdraft limit. He had also been told by the bank manager that he should not use the card to cash more than one cheque of £30 a day.

The House of Lords held that there was a false representation that he had the bank’s authority to use the card in the way he did and upheld his conviction under s 16 of the 1968 Act of obtaining a pecuniary advantage by deception.

Representations to machines

The representation can be made to a person or to a machine. Section 2(5) of the Fraud Act 2006 specifically covers representations made to any system or device. It states:

‘2(5) A representation may be regarded as made if it (or anything implying it) it submitted in any form to any system or device designed to receive, convey or respond to communications (with or without human intervention).’

This is designed to cover the many situations in the modern world where it is possible to obtain property via a machine or the Internet or other automated system such as cash dispensers or automated telephone services. The provision in the Act is wide enough to cover putting a false coin into a machine to obtain sweets or other goods or submitting a claim on the Internet. The Explanatory Notes to the Act make this clear. They state:

QUOTATION

‘The main purpose of this provision is to ensure that fraud can be committed where a person makes a representation to a machine and a response can be produced without any need for human involvement. (An example is where a person enters a number into a “CHIP and PIN” machine.)’

The Explanatory Notes also state:

QUOTATION

‘This offence would also be committed by someone who engages in “phishing”: i.e. where a person disseminates an email to large groups of people falsely representing that the email has been sent by a legitimate financial institution. The email prompts the reader to provide information such as credit card and bank account numbers so that the “phisher” can gain access to others’ assets.’