Fraud Bill [HL]

moved Amendment No. 2:"Page 1, line 19, leave out paragraph (b) and insert—" ““(b)   either— (i)   he intends by making the representation to make a gain for himself or another, or (ii)   he knows that his making the representation will, in the ordinary course of events, cause loss to another or expose another to a risk of loss.”” The noble Lord said: Amendments Nos. 14 and 16 are also grouped with Amendment No. 2. Clauses 2 to 4 set out the new offence of fraud and the three ways in which the crime may be committed. As Members of the Committee know, the new categories are as follows: fraud by false representation, fraud by failing to disclose information and fraud by abuse of position. The drafting of all three clauses is similar in that a person will be in breach of these sections if he intends by making the representation, by failing to disclose information or by abusing his position,"““(i) to make a gain for himself or another, or""(ii) to cause loss to another or to expose another to a risk of loss””." Although sub-paragraph (i) is a straightforward application of the word ““intends””, sub-paragraph (ii) is more obscure. A fraudster, after all, does not act with the purpose of putting another at risk of loss, although he may be aware that it will be a consequence of his actions. We believe that the formula would benefit from the insertion of a knowledge requirement. Generally a fraudster acts with the purpose of making a gain for himself or another, but on occasion this will not be the case. In Wai Yu-Tsang, a Privy Council case in 1992, the defendant covered up irregularities at the bank in which he was employed with the intention of protecting the bank’s interests. Nevertheless he was held to be guilty of conspiracy to defraud on the basis that his acts imperilled the economic interests of another. The current formulation of the general fraudulent intention is presumably intended to catch such conduct by use of the oblique definition of ““intention””. At page 71 of the 10th edition of Criminal Law, Smith and Hogan, citing a 1999 appeal case called Woolin, state:"““A jury may also find that a result is intended, though it is not the active purpose to cause it, when,""(i) The result is a virtually certain consequence of the act, and""(ii) The actor knows that it is a virtually certain consequence””." Our amendments would ensure that the Bill has a similar effect to that formulation, but drafted to be clearly understood on the ordinary meaning of the words, and will continue to mean what Parliament intends it to mean independently of the development of the concept of ““intention”” in the common law. This formula has been taken from the Law Commission’s draft Bill on reforming the law of violence. I beg to move.