Gilbert, R v

For fraud by false representation under section 2 of the Fraud Act 2006, it is insufficient that the defendant generally intended to make a gain or cause loss. The gain, loss or exposure to loss must be intended by making the false representation. Whether that causal link is proved is a question for the jury on the facts.

A direction which permits conviction because the representation may facilitate future legitimate trading, without properly addressing its causal connection with the intended gain, is inadequate and may render the conviction unsafe.

The appellant was convicted at the Crown Court at Peterborough of fraud by false representation. The prosecution alleged that, when applying to open a bank account for a company, she participated in giving false information that proposed property developments would be funded in part by savings.

The appellant signed the application as a company officer. The prosecution relied on the opening of the account as a first step towards financial gain. On appeal, the principal issue was whether the Recorder had correctly directed the jury on the requirement that any intended gain or loss be intended by making the alleged false representation.

1. Appeal allowed. The appellant’s conviction for fraud by false representation on count 3 was unsafe and was quashed.
2. Section 2 of the Fraud Act 2006 requires proof that the defendant dishonestly made a false representation and intended, by making that representation, to make a gain, cause loss, or expose another to a risk of loss. A general intention to make a gain, or to cause loss or risk of loss, does not alone satisfy the section.
3. The jury had to be sure that the required causal link existed between making the false representation and the intended gain, loss or exposure to loss. Whether that link is established depends on the facts of the individual case.
4. The Recorder had allowed the case to proceed, and directed the jury, on the basis that opening the account might enable future property development or a sale of the company which could produce a gain. That did not properly address the statutory causal link between the alleged representation and the intended gain. The misdirection occurred both at the close of the prosecution case and in the summing up.
5. The court rejected complaints that there was no evidence capable of establishing a representation or its falsity. It also held that an earlier misdirection suggesting that the appellant might have been party to a later fraudulent scheme had been promptly and properly corrected, so it could not affect the safety of the conviction. The unresolved error on intended gain did affect safety.

• Court of Appeal (Criminal Division) — Allowed the appeal and quashed the appellant’s conviction for fraud by false representation: [2012] EWCA Crim 2392.
• Crown Court at Peterborough — Convicted the appellant on count 3 of fraud by false representation.