Clause 2

Fraud Bill [Lords] – in a Public Bill Committee on 20th June 2006.

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Fraud by false representation

Question proposed, That the clause stand part ofthe Bill.

Photo of Mike O'Brien Mike O'Brien Solicitor General, Law Officers' Department 10:45 am, 20th June 2006

The clause makes it an offence to commit fraud by false representation. The offence was recommended by the Law Commission and widely welcomed in responses to the Government’s consultation paper. A representation is defined as false if it is “untrue or misleading”, and if

“the person making it knows that it is, or might be, untrue or misleading.”

The types of representation covered by the clause may be of fact or law, including a representation as to a person’s state of mind. They can be stated in written or spoken words, or in non-verbal communication.

Clause 2 goes wider than the existing Theft Act 1968 offences, which rely on the deception of a victim. Under clause 2, it will be immaterial whether the person subject to the false representation believes it to be true. The fact that the representation was made will be sufficient evidence to prove the crime.

Photo of Dominic Grieve Dominic Grieve Shadow Attorney General

I do not wish to repeat what I said earlier, and clauses 1 and 2 have a clear linkage. The major change in the law that the clause brings about is that it will no longer be necessary to show that the dishonest representation acted upon the mind of another person. There will therefore be a great simplification in the presentation of cases.

As I highlighted in my earlier example, there will be a grey area in such cases because of the extent to which there is sometimes collusion between the person being “deceived” and the person doing the deceiving. The matter is not always as clear cut as one might think. Certainly, from my experience of criminal practice, the turning of a blind eye to a deception that may be of mutual advantage occurs quite frequently in the fraudster’s canon. Prosecutors and judges will have to exercise a measure of discretion in such cases, particularly when it comes to sentencing, and that may prove quite complex. That having been said, I think it right, as a basic principle, that Parliament should insist that individuals do not make dishonest representations for the purpose of obtaining gain for themselves. I do not see anything wrong with the philosophical principle behind clause 2. For that reason, it commands my support.

Photo of David Heath David Heath Shadow Leader of the House of Commons, Shadow Spokesperson (Cabinet Office)

I would take a similar view. I just want to make a couple of observations about the framing of the clause, for reference when we discuss later clauses. First, there is a clear mens rea in this clause, which I think is right. Secondly, the term is

“dishonestly makes a false representation”,

not “makes a dishonest representation.” That is an important distinction. There are two factors in play: first, there is the issue of whether the representation is false; secondly, making that false representation is a dishonest act in itself, and there is the issue of whether the person is aware that they are dishonestly making a false representation. That has relevance to debates that we will have on later clauses, but it would be wrong of me to explore that area further at this stage. I simply point out, for the benefit of the Committee, that that is the case.

Photo of Mike O'Brien Mike O'Brien Solicitor General, Law Officers' Department

I am grateful for the way in which Opposition Members have raised their views on the clause, and for the general support for it. I have one point to make to the hon. Member for Somerton and Frome (Mr. Heath): the current definition of dishonesty was established, as the explanatory notes say, in the case of Ghosh in 1982. The judgment sets out a two-stage test. To respond to the hon. Gentleman’s point about dishonesty, the first question is whether the defendant’s behaviour would be regarded as dishonest by the ordinary standards of reasonable and honest people. If the answer is positive, the second question is whether the defendant was aware that his conduct was dishonest and would be regarded as dishonest by reasonable and honest people. That is the approach to dishonesty that we want to see the Bill take.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.