The short answer under the Fraud Act 2006: When one can establish dishonesty by way of misrepresentation, omission, or abuse of position with a view to making a gain or causing loss to another, whether temporary or permanent.
What follows briefly, is a history of the development in case Law and Statutes to reach such a conclusion.
The following blogpost relates to the Laws of England and Wales. In other countries, the Law of Larceny developed differently.
From medieval times until the 1800s, land-owners and home-owners were a rich minority elite, and the masses lived on land not owned by them.
However, in or around 1834, there was recognition by the Criminal Law Commission that socio-economic changes of prosperity, dictated that it was in the public interest to protect…’ the great mass of property necessarily confided to the possession of various agents’. Damages sought for such wrongful actions, were dealt with in Common Law with claims of compensation, previously.
Lord Mansfield in Atcheson v Everitt (1775), 1 Cowp, p383, 391 stated that there was no distinction better known than the distinction between civil and criminal law, or between criminal prosecutions and civil actions’.
Essentially, in a civil claim, one seeks compensation. In a criminal prosecution, the emphasis is upon punishment.
Previously, Blackstone had based a distinction between private wrongs: an infringement or privation of the private or civil rights belonging to individuals, considered as individuals, and public wrongs: A breach and violation of public rights and duties, which affect the whole community, distinguished by the harsher appellation of crimes and misdemeanours’.
Such crimes ‘…strike at the very being of society, which can not possibly subsist where actions of this sort are suffered to escape impunity’.
In the second half of the 18th and throughout the 19th Century, there was a change to protect property and actions were moved from the civil to the criminal arena, where compensation in civil courts was inadequate, and prejudiced in the interests by inadequate security of property rights and protection of property transactions.
Consent negatived by deceit:
In Pear’s case (1779) 1 Leach 212 where having gained possession consensually, then formed a larcenous intention, animus furandi, and converted such property for their own use.
Where possession was gained by a trick or other artifice, consent was negatived, leaving the owner with constructive possession. Thus was born the doctrine that deceit negatived consent to taking possession.
Such larceny was defined as ‘a felonious and fraudulent taking and carrying away..’.
However, in Parkes (1794), 2 Leach 614, denying the passing of title would have prejudiced a subsequent honest third party acquiring the property from a fraudster.
In 1803, larceny was defined by Lord Justice East as a non-consensual taking with an intent to convert property to his own use.
Non-consensual taking, was further defined by the Criminal Law Commission in 1847 as gaining possession of property by intimidation or deception as examples of non-consentual taking.
In the case of Cabbage (1815) R & R 292, animus furandi was further defined as requiring an intention to deprive owners permanently of property.
The Larceny Act 1916 codified the developing case law, by defining animus furandi/ mens rea : ‘fraudulently and without claim of right made in good faith..with intent…permanently to deprive the owner thereof’.
The 1916 Act was repealed and in its place, the Theft Act.
The Theft Act was mostly repealed and in its place, the Fraud Act 2006.
Criminal intent in terms of dishonesty, is still necessary to prove, however the intention to permanently deprive property, is replaced with temporary or permanent. An actual gain or advantage, is no longer necessary, however.
Making a gain, or causing a loss, are defined as follows:
Section 5, Fraud Act 2006
“Gain” and “loss”
(1)The references to gain and loss in sections 2 to 4 are to be read in accordance with this section.
(2)“Gain” and “loss”—
(a)extend only to gain or loss in money or other property;
(b)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).
(3)“Gain” includes a gain by keeping what one has, as well as a gain by getting what one does not have.
(4)“Loss” includes a loss by not getting what one might get, as well as a loss by parting with what one has.
Dishonesty in respect of property is therefore preserved to be dealt with essentially as a criminal offence. The doctrine that deceit negatives consent, appears to be preserved at least on a limited basis within the Proceeds of Crime Act 2002, on the basis that one should not gain or benefit in any way from an illegal or immoral act, albeit that if illegality is established, such an agreement is void, the offender should not gain at all from any profit whether they are legitimately entitled to receive it, or not. There are good grounds for the Courts to award the victim with the entire property, and there are grounds to do so, which are established in the Proceeds of Crime Act 2002.
Professor David Rosen is a Solicitor-Advocate with higher rights of audience in Civil and Criminal Courts. He is Partner and head of Litigation at Darlingtons Solicitors LLP, and an associate Professor of Law at Brunel University where he lectures and writes extensively on Civil Fraud and Criminal Fraud issues. He is Strategic Director of the Association of Certified Fraud Examiners UK Chapter, a Certified Fraud Examiner, and a member of the Royal United Services Institute.
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