The
Solicitor-General: I assure the hon. Gentleman that if
someone goes into an elderly person’s home and steals some
money, that situation is covered elsewhere in the criminal law. Nobody
is suggesting otherwise. The new provision is meant to catch other
circumstances. It may cover that situation too, but one would not
choose to prosecute such a theft as a
fraud. We are
considering circumstances in which people may have the key to
someone’s house, or their pension card or pension book, and may
collect their pension, or obtain information as a result of documents
that may be in the house. The situations about which those who made
representations to us were concerned were those in which someone has a
relationship with such a person that supports their level of
independence—situations in which there is an element of trust,
but that does not extend to what Lord Justice Millett described as the
“single-minded loyalty” of the fiduciary. The hon.
Gentleman’s argument that the provision be restricted to
fiduciary relationships would leave a vulnerable group of people
exposed, and I do not think he wants that. We do not, and we have had
representations from others that they do not, either. It is on that
basis that we put the wording in the clause,
“he is expected to
safeguard”. Such a person
is in a position where they are trusted, but it might not go as far as
having a legal relationship which involves an entitlement on the part
of the other person to their single-minded loyalty. The person may have
loyalty to many others.
12.15
pm
Mr.
Grieve: As a practising barrister I have a loyalty to all
sorts of people, with lots of clients going at the same time. I have to
say to the Solicitor-General that I am not wholly satisfied with his
use of that single-mindedness. To me, a person who is handed a benefit
book is in a fiduciary relationship with the person who has entrusted
it to him. “Fides”—that is where the word comes
from.
Mr.
Heath: I am glad that the hon. Gentleman said that. It
seems to me that the example the Solicitor-General uses is most
peculiar. The element of trust that has been given to that meals on
wheels lady implies a single-minded duty and a single-minded loyalty.
There is a fiduciary relationship. That may not apply to everything
that person does in her capacity as a meals on wheels lady, but in
respect of that position of trust which has been formed, it seems to me
as a layman that a fiduciary duty does exist. It also seems that if it
does not exist, there is no reasonable expectation that could be
demonstrated in a court of law that that person has a duty to safeguard
the financial interests.
Mr.
Grieve: I agree with the hon. Gentleman. The last thing
that I would want to do is, by pressing my amendment to the vote,
remove the elderly and vulnerable that he describes from the proper
protection they ought to have from people who abuse positions of trust.
However, I do not think that my amendment would do that. It would
provide greater clarity in relation to the informal relationships that
we touched on earlier, which constitute an extremely grey area. It will
also clarify the potential problem of this law extending into breach of
confidence
generally. This is not
an easy area but, having listened carefully to what the
Solicitor-General has said, he has not persuaded me. Therefore I wish
to press my amendment to a Division.
Question put, That the
amendment be
made. The
Committee divided: Ayes 6, Noes
8.
Division
No.
1] Question
accordingly negatived.
Question proposed, That
the clause stand part ofthe Bill.
Mr.
Heath: I shall be brief. I would like the
Solicitor-General to put on record why it was felt that it was not
necessary to accede to the original recommendation of the Law
Commission in respect of a secrecy element to the offence in the
clause. The Law Commission took the view that one of the necessary
requirements of the offence was that the person against whom the fraud
was committed should not be aware of the fact that the person was
acting in the way that they did; if they were aware, it negated the
offence. That has not been incorporated into the Bill, and it would be
helpful if the Solicitor-General explained
why.
The
Solicitor-General: Although the Law Commission recommended
that there should be an offence of fraud only if the abuse of a
person’s position is both dishonest
and secret, after considering the arguments advanced during the
consultation, the Government decided not to make secrecy part of the
offence. It is difficult to define exactly when something is secret and
when it is not. How many people have to know about it? What if people
can say, “It was secret from me, but it may not have been secret
from my colleague at work.”? It difficult to define exactly what
secrecy means, and it becomes an unnecessary complication and an
over-particularisation. We felt that an offence may well be committed
even if the information or the circumstances in which the abuse takes
place are not secret. On that basis, and to avoid a lot of technical
and legalistic arguments, as well as the problem of
over-particularisation, we took the view that we would not include
secrecy as an element of the
offence. Question
put and agreed to.
Clause 4 ordered to stand
part of the
Bill. Clause
5“Gain”
and
“loss”
Mr.
Grieve: I beg to move amendment No. 3, in clause 5, page
2, line 38, leave out subsection
(3).
The
Chairman: With this it will be convenient to discuss the
following amendments: No. 4, in clause 5, page 2, line 40, leave out
subsection (4). No. 8,
in clause 5, page 2, line 40, after ‘might’, insert
‘reasonably and
lawfully’.
Mr.
Grieve: The first two amendments in the group are probing
amendments, but through them we seek to engage in debate on the
definition of gain and loss.The Solicitor-General may well be
able to reassure me, but my concern is that the definition of gain in
subsection (3) specifically
includes “a gain by
keeping what one has, as well as a gain by getting what one does not
have.” In ordinary
parlance, a gain is normally obtaining something to add to what one
already has. Saying that it actually means keeping what one already has
raises a number of issues on which I would like further clarification
from the
Solicitor-General. I
understand that it is possible by dishonesty to avoid paying something
to somebody else, thereby retaining it for oneself, but if one is doing
that, one is causing the other person a loss. In what circumstances
does the Solicitor-General envisage that a gain by keeping what one
already has would not include causing a loss to someone else by not
paying them what is their due? I simply ask whether subsections (3) and
(4) are not in fact otiose and unnecessary.
Subsection (4) does the reverse
of subsection (3). It
states: “‘Loss’
includes a loss by not getting what one might get, as well as a loss by
parting with what one has.”
That fits precisely with my earlier
point: if one prevents someone from getting something that they are
entitled to, that is clearly a loss to that person; but what are the
Government trying to cover by referring to a person not getting
something that they might get? It refers, I
suppose, to the chance of getting something. Perhaps that is what the
Solicitor-General is aiming at. Iam slightly happier with the
definition of loss in subsection (4) than with the need to
particularise gain in the manner specified in subsection (3). The
central issue is the circumstances in which one might gain by keeping
something that one already has when that does not cause a loss to
another person. Mr.
Heath: My amendment in the group is No. 8, and it probes a
point similar to that raised by the hon. Member for Beaconsfield. The
definitions of gain and loss are imported from the Theft Act 1968, but
when we deal with fraud we deal with slightly more mutable subject
matter. My concern is
about the phrase “not
getting what one might
get”. One “might
get” all sorts of things. One might get things illegally,
through serendipity or in a number of ways that should not be
encompassed by the definition in the clause. My amendment would insert
the words “reasonably and lawfully”, which would at least
provide a concept of entitlement—the word used by the hon.
Gentleman. It would provide the concept of someone having a reasonable
and lawful expectation to receive something. That would narrow the
scope a little, without in any way destroying the essential element in
the definition or what the Government are trying to
achieve.
Jeremy
Wright: Does the hon. Gentleman agree that the
part-definition of loss as
“not getting what one might
get” is exactly the same
as being exposed to “a risk of loss”, which is already
explicitly covered in clauses 2, 3 and 4, which deal with the types of
fraud that may be
committed?
Mr.
Heath: The hon. Gentleman makes a perfectly valid point,
and I would welcome the Solicitor-General’s comments on
it.
The
Solicitor-General: The Bill is based on the Law
Commission’s thorough review, which started way back in 1998, of
the deception offences in the Theft Acts. It recommended that the Theft
Act definitions of gain and loss should be applied to the new offences
because they are well understood in the courts and have caused no great
difficulty. Clause
5(3) fulfils the policy that gain should include keeping what one has.
That means that the avoidance of payment may, in certain circumstances,
amount to fraud. Section 2 of the Theft Act 1978 has a special offence
of evading by deception a liability to make a payment. An example would
be when a man borrows money from a neighbour and, when a payment is
due, tells a false story about a family bereavement or tragedy, which
persuades the neighbour to cancel the debt. That may be the example
that the hon. Member for Beaconsfield asked
for.
Mr.
Grieve: But that would cause loss to the neighbour, would
it not?
The
Solicitor-General: It would, in the sense that the
neighbour would not receive the payment back in a particular way. The
payment might not involve the exact same sum as was lent, or there
might a different arrangement whereby something else was to be paid
back. That might mean that the neighbour had lost not what he had
given, but something else that he might have hoped to get. A person may
wish to receive payment of a debt in a number of ways; we need to
ensure that the law does not create a gap or lacuna that would result
in our not taking proper account of all such
circumstances.
12.30
pm Insider
training is an example of a situation in which there is a gain but no
loss or it is difficult to show loss and any loss may be indirect or
diffuse. That would include trading to keep what one has. Let me turn
to subsection (4) because it is the obverse of this. It derives from
paragraph 7.45 of the Law Commission’s 2002 report in which it
said that loss in the sense
of: “not getting what one
might get should be sufficient for the new fraud
offence.” They
added: “thus, it could be
fraud to prevent another person from receiving money or other property,
which that person might otherwise have
received.” An
example might be where an employee is entitled to some special payment
from his employer. The employer wrongly informs him that he is not so
entitled. Such cases may also involve gain to the defendant, but the
gain may not always be so easy to prove as the loss.
In our 2004 consultations, we
asked stakeholders specifically if they agreed with the commission that
gain and loss should be defined equally under the Theft Act. More than
70 stakeholders took the trouble to reply and the vast majority agreed
with the proposal. In so far as there was any disagreement, it was on
the question of whether the definition should go wider. A few
respondents did not believe that fraud should be tied to gains or
losses in property.
However, we
agreed with the majority and with the Law Commission that fraud must be
defined as an economic crime, if it is not to become too unhelpfully
wide a concept. The vast majority of stakeholders thought that the Bill
definitions should be aligned with those of the Theft Act 1968, which
apply, for example, to the offence of false accounting. Changes, under
both the Theft Act and the Bill, may appear in the same indictment. We
therefore consider that it is important that the definitions in the
Bill should be consistent with those that apply to the Theft Act
offences. If we amend it, we are going to create a real problem of
confusion in court with judges having to explain different
definitions. I am
aware that Justice, which sadly failed to reply to our invitation to
comment in 2004, has provided a briefing argument against the policy,
to which the vast majority of stakeholders have agreed. We do not agree
with the points in its briefing. It gives an example of a case, which
someone raised in the
course—
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