This section of the Fraud Act is clearly intended to prevent the dishonest abuse of position by those whom we are entitled to consider above suspicion e.g. a trustee, company director or executor of a will. However, it is not all together clear who will be regarded as falling into the category of being expected to safeguard, or not act against, the financial interests of another person. Employees who use their position to gain something for themselves even though they are not actually stealing property would be caught by this section. A clear example is where catering or bar staff buy in their own goods to sell to customers instead of those of the employers. What about the nurse who is looking after a patient or a less formal carer? In a recent case this section was considered in relation to a young man who persuaded his elderly next-door neighbour to give him the million pounds that he had won on the lottery on the basis of family friendship. It will in all cases come down to a matter of fact and degree as to who is or is not in a position of trust for the purposes of this section.
The Law
- A person is in breach of this section if he
- occupies a position in which he is expected to safeguard, or not to act against, the financial interests of another person
- dishonestly abuses that position, and
- intends, by means of the abuse of that position
- to make a gain for himself or another, or
- to cause loss to another or to expose another to a risk of loss
- A person may be regarded as having abused his position even though his conduct consisted of an omission rather than an act
Dishonesty
The test for dishonesty in fraud cases is based on the definition in the case of Ghosh. This means that a defendant could be found guilty of Fraud and in particular, Fraud by Abuse of Position even though he genuinely believed himself or another to have a right to the property in question. This would depend on whether a jury decided if the defendant came by the property as dishonest even though they accept that he had a right to it in any event. An example of this might be where a creditor tricks a debtor into paying over an amount which is legitimately owed to him.
This strange position did not seem to be a problem under the law preceding the Fraud Act 2006. But the wording of the new law seems to actively urge the court to look, not so much at the dishonesty of the motive but at the dishonesty of the means. For example, S.2 deals with fraud by dishonestly making a false representation with a view to making a gain, rather than making a false representation with a view to dishonestly making a gain. So, an accountant, retained by a company uses his position to obtain, by a dishonest method, arrears of fees properly owed to him, may be convicted of Fraud by Abuse of Position.
Intent to gain for himself or another or to cause loss to another or expose another to a risk of loss
Fraud Act 2006, s. 5 states:
‘Gain’ and ‘loss’
- extend only to gain or loss in money or other property
- include any such gain or loss whether temporary or permanent and
- ‘property’ means any property whether real or personal (including things in action and other intangible property)
‘Gain’ includes a gain by keeping what one has, as well as a gain by getting what one does not have.
‘Loss’ includes a loss by not getting what one might get, as well as a loss by parting with what one has.
A defendant may act with ‘intent to gain’ even where he/she seeks to acquire property owing to him/her; and even intent to gain or lose on a temporary basis may suffice, for example, where payment is withheld by an accountant in order to accrue interest or to help cash flow.
Liability by omission
It is clear that this section of the Fraud Act encompasses both action and inaction with intent to cause gain or loss. A company director who intends to get new business for himself personally rather than seek to secure new business on behalf of his company would be within the ambit of this offence. What of the position of an employee who fails to pass on new business leads to the loft conversion company that employs him, diverting them instead to his brother in law who is a builder? Employees are considered in the next paragraph.
Written by Athena Forensics. Computer Forensic and Mobile Phone Forensic Investigation and Expert Witness Services Throughout the UK www.athenaforensics.co.uk
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