Fraud Bill [HL]

moved Amendment No. 13:"Page 2, line 11, leave out ““and”” and insert ““or" (   )   dishonestly takes advantage of another person (P) by failing to disclose to P information of a kind which he knows P trusts him to disclose and, in either case”” The noble Lord said: I rise to give the noble Lord, Lord Kingsland, a break. I would describe this as a semi-probing amendment. The amendment would restore to the Bill a provision, in similar but not identical wording, which was in the Bill as drafted by the Law Commission. The effect of the amendment would be to impose criminal liability on someone who has abused the trust of the victim and profited as a result. I repeat the scenario that I mentioned at Second Reading. The owner of a picture wants to sell it and says to a friend who has some expertise in art, ““I know that you like this picture and I know that I can trust you. Will you make me an offer for it?””. That is a situation entirely different from a car boot sale because no one in their senses, whether the buyer or the seller, would trust the other party at a car boot sale. The friend in this case realises that the picture is a very valuable one, not perhaps a Renoir but a picture by some Victorian artist whose pictures now fetch a very high price, and knows that the owner does not realise its real value. So the friend makes an offer far below the real value which the owner accepts. That is plainly not within the wording of Clause 3 but would be within the wording of our amendment and of the Law Commission’s version of the Bill. That scenario opens up a number of questions. The purpose of this amendment is to get a fuller answer to those questions than was given at Second Reading. The first question is, why did the Government alter Clause 3 from the Law Commission’s version? It is clear from the Law Commission’s report at chapter 7, paragraphs 31 to 34, that the Law Commission thought that this form of misconduct by the friend ought to be criminal. During his speech at Second Reading the noble and learned Lord the Attorney-General said that the Government were persuaded in the course of the consultation that the offence should be restricted to breach of legal duty. The main objection, as it appears from the Government’s response to the consultation, was that it undermined the principle of caveat emptor. That is perhaps not a principle which is particularly attractive but I recognise that as a matter of general law it cannot be removed. However, the Law Commission’s proposals applied only to cases where there was a relationship of trust between buyer and seller. Where there is such a relationship, the abuse of that trust seems to me to be not just morally dubious, as the Government say in paragraph 25 of their response to the consultation, but morally wrong. It is certainly dishonest and I believe it is strongly arguable that it should be a crime. The other complaint made in response to the consultation was uncertainty. I would have thought that there may be some uncertainty at first but that the courts would be fairly soon able to establish guidelines. It is, of course, true that there are different lines of argument here. It may be said that an amendment to Clause 3 is not necessary at all because dishonest conduct of the kind carried out by the friend would be caught under other provisions. For example, could the conduct of the friend be a false representation caught under Clause 2 because of an implication to be implied from the surrounding circumstances that any offer will be a fair offer, so that an offer made by the friend at a gross under-value is a false representation that the offer represents fair value? Or could the conduct of the friend be caught by Clause 4 as being an abuse of position? The friend could be said to be in a position of trust and to be abusing that position. Or does the word ““position”” refer to something more like a post of employment or an agency or something similar to that? I believe that the Law Commission report certainly suggests the latter meaning, but that was in the context of a Clause 3 which was in a different form. The word ““position”” is ambiguous and is not defined. I feel that in what I have said I have set something which is in the nature of questions for a law examination. I am sure that the noble and learned Lord the Attorney-General would pass that examination with high marks, but it is an important set of questions. I await the answer with interest. I beg to move.