Clause 3
Fraud Bill [Lords]
10:45 am
Mike O'Brien (Solicitor General, Law Officers' Department; North Warwickshire, Labour)
I am grateful to the hon. Gentlemen for the way in which they set out their views on the clause. Probably the best place to start is with the concept of legal duty, as explained in the Law Commission report on fraud, in paragraphs 7.28 and 7.29.
Looking at the duty, with such duties there is an overlap between clauses 3 and 4. There is also a view that a legal duty can arise in a number of ways, primarily by operation of law, but not necessarily prescribed by law in the sense that a duty can arise by the nature of a relationship that has been formed.
I will come back to the Law Commission report in a moment, but let me make that clear. When people are engaged in commercial relationships, there is the principle of caveat emptor, which has been restricted by various pieces of legislation over the years by Parliament. Let the buyer beware. That will still be the case. When people engage in normal commercial relationships, the buyer will need to be beware, to be aware of what the person who is selling the product says.
The clause will do for situations where a legal duty has been created prior to or during the course of a relationship between the alleged victim and the defendant. There is therefore a duty on the defendant to disclose to the potential victim various information. An example would be where a solicitor fails to tell a client relevant information about the law or case that would result in the solicitor gaining financial benefit personally and the client losing. There is a clear relationship between the solicitor and the client. There is a duty to disclose that information. He has failed to disclose that information. He has done so knowing that he has the duty and, therefore, he has acted dishonestly. The result of that should be that he has failed to disclose information and therefore committed an act of fraud.
Another question might arise in a more difficult case, when a person is applying for insurance and has a heart condition, which they failed to disclose. That is a civil matter; to some extent, it involves a breach of an uberrima fides duty to disclose information in particular types of contract. Obviously, insurance companies may well take the view that they would deal with that through the civil procedures and that would be the normal way. However it is possible for someone who was deliberately intending to obtain insurance coverage and, in due course, to make a claim on it to be in a position where they were failing to disclose relevant information where they had a legal duty to do so, with the intention of benefiting, either by insurance coverage or by undertaking a medical procedure using that insurance. The result might be that they are in breach of the clause.
Those are a couple of examples of examples of where there is a clear duty and where failure to disclose information may well put someone in breach of the clause. I hope that those comments deal with hon. Members’ concerns and that the Committee will allow the clause to stand part of the Bill.