Fraud Bill [HL]

The noble Lord correctly indicates what the effect of Amendment No. 11 would be; it    would broaden the offence—I would say considerably—by extending it to a situation in which a person dishonestly fails to disclose information in circumstances where he is under no legal duty of any kind to do so. As the noble Lord rightly said, and as I noted in dealing with the previous amendment, the Law Commission recommended that in certain circumstances the offence would be committed even in the absence of a legal duty to disclose—but that was the part of the report that the Government did not find persuasive. Let me give an example. The Law Commission cited the example of an antiques dealer who calls on vulnerable people and buys their heirlooms at unrealistically low prices. That is in paragraph 7.24 of the Law Commission report. The commission saw no reason why that person should not be guilty of fraud, but it went on to say that it would ““clearly be wrong”” to impose liability for fraud on a private individual who sees a valuable antique in a car boot sale and pays a low price for it. That is in paragraph 7.26. In the practical circumstances of real cases, it would be very difficult to make such distinctions. Does the vulnerability of the victim make a difference? A vulnerable person might be selling heirlooms at a car boot sale, but does the expertise of the purchaser really make all the difference? A person who is not an antiques dealer may none the less have considerable expertise in the field. It is perhaps not surprising, against that background, that the responses to the consultation last year, while giving a general welcome to the Law Commission’s scheme, showed considerable opposition to that particular aspect of the scheme. I cite if I may—I hope correctly recollecting it from the Law Commission’s report—that the commission also posed the example of the antiques dealer or art dealer not disclosing that the intended probable resale price for an item was £10,000 and that it would mean a very large profit for the dealer. I wonder whether the same would apply if the intended expected resale price was £4,000. These are difficult matters of degree. If I may, I shall read the Government’s response, which summarised the points of opposition to this particular aspect of the scheme in these terms:"““One of the main arguments was that this would intrude on the ‘caveat emptor’ principle, and create a conflict between civil and criminal law, in that it would become criminal not to provide information which you are entitled to withhold under civil law. The other main objection was the lack of certainty: while the requirement of ‘dishonesty’, which underlies all 3 limbs of the new fraud offence, provides a measure of protection, it will be necessary to make a judgment in each cases as to whether the ‘victim’ is trusting the defendant to disclose the information. The example of a person selling a car who does not reveal that he has successfully camouflaged some damage to the bodywork with filler is one example presented to us of a situation where it is arguable that the purchaser trusts a disclosure to be made, but consensus is lacking and it will be hard to say where the line should be drawn. It was pointed out that this is a problem not only for juries but for police in deciding what to investigate. It was argued that the conduct covered by””—" what was then—"““Clause 3(4) may be dishonest and morally reprehensible, but that does not mean it should be criminal””." Amendment No. 11 would go beyond what the commission recommended and would give rise to considerable difficulties. The commission limited the moral duty and it is not clear what kind of duty is intended by the amendment once the word ““legal”” is removed that is not a legal duty. There remains the objection that the extension of the offence to include situations in which a person is under no legal obligation to provide the information would conflict or intrude on the ““caveat emptor”” principle. The Government believe that it would be undesirable to create this disparity between the criminal and the civil law; it should not be criminal to withhold information which you are entitled to withhold under civil law. Having accepted the widespread concerns over extending the criminal law into areas where something may be morally dubious but not clearly seen as criminal, the Government clarified the conditions under which a person would be obliged to disclose the information in question. Although the expression ““legal duty”” is not commonly used in statutory law, it clearly distinguishes the kinds of duty which should be considered, so that the offence does not encroach on civil or moral duties. I suggest that there will be no difficulty in distinguishing a legal duty from what is not a legal duty. The effect of Amendment No. 12 would be in the opposite direction—to narrow, rather to widen, the ambit of the clause. Amendment No. 12 reverts back to the words used by the Law Commission in Clause 3 of its draft Bill. During the drafting of Clause 3 it was found that although it is generally as broad as the word ““legal””, it was not clear that the words,"““duty under any enactment, instrument or rule of law””—" in the words of the amendment—would cover all forms of legal duty, such as duties arising under the express terms of an oral contract. Under which of the words would that fall? Under an oral contact, something would not be caught that was not an instrument or enactment or a rule of law. Oral contracts remain very common and give rise to duties. We invite the noble Lord to consider that it is better to leave the matter as drafted, with a clear statement that what is necessary is that there is a legal duty, without seeking to define, qualify, limit or cut that down any further. I hope that having considered that, the noble Lord will withdraw the amendment.