Fraud Act 2006

[enoughisenough]

We are not just a capitalist society. We are a regulated economy based o the rule of law. If child labour makes me a profit that is not the beginning middle and end of it is it?

[diddydicky]

It's a fair enough point. I don't think anyone was suggesting otherwise. An absolute mountain..but who would have thought that the banks would end up paying back an estimated 500 million and never having the confidence to take it head on in the courts on a case by case basis?

 

Nontheless your argument is flawed because irrespective of what parliament may or may not have intended that's the way the law is framed and only the law lords can ultimately decide differently.

 

I might add that it gets the odd dodgy practice halted forthwith whenever I've mentioned it. Oh and by the way 3000 posts near enough in 5 months. Where do you find the time?

 

i just took 2 years out to build a new house- just finishing off touching up the old one then back to work for a few more years,

 

had quite a few cards to sort out so needed to research as much as i could, also it helps being a night owl- usually dont go to bed until around 2-3 am

[diddydicky]

It's a fair enough point. I don't think anyone was suggesting otherwise. An absolute mountain..but who would have thought that the banks would end up paying back an estimated 500 million and never having the confidence to take it head on in the courts on a case by case basis?

 

 

the major difference being that the oft took on the fight for the little guys

 

absolutely no chance of them doing so on this one

[iconoclash]

Hi - see the point re proof of intent 'malice aforethought' et al - isnt there anything similar available like the stuff in harrassment, I mean the "ought to have known even if they say they didnt" stuff or would misrepresentation be a route where the burden of proof can be shifted to the other side??

Edited July 29, 2009 by iconoclash
typo

[diddydicky]

Hi - see the point re proof of intent 'malice aforethought' et al - isnt there anything similar available like the stuff in harrassment, I mean the "ought to have known even if they say they didnt" stuff or would misrepresentation be a route where the burden of proof can be shifted to the other side??

 

i could say i "ought to have known" that when i took the radiator cap off that steam would come out under pressure and scald the person standing next to me

 

or that i "ought to have know" that if i opened my umbrella in a strong wind that it might get broken and hit someone in the face

 

I "ought to have known " that if i opened my car door on the hard shoulder that the wind from a passing lorry would rip it off and it might kill a person further up the hard shoulder

 

it does not show that i did this dishonestly or that i deliberately intended to achieve those consequences of my actions - just that i was careless, stupid or reckless as to what the consequences would be

[Dougal16T]

Well now,

 

Let's not get sidetracked, shall we?

 

The important point is the Fraud Act 2006 and as has been pointed out the way that it is worded.

 

Let's look at 'intent'

 

Intention is defined in R. v Mohan as "the decision to bring about a prohibited consequence".

A range of words is used to represent shades of intention in the various criminal laws around the world. The most serious crime of murder, for example, traditionally expressed the mens rea element as malice aforethought, and the interpretations of malice, "maliciously" and "wilfully" vary between pure intention and recklessness depending on the state and the seriousness of the offence.

A person intends a consequence when he or she foresees that it will happen if the given series of acts or omissions continue and desires it to happen. The most serious level of culpability, justifying the most serious levels of punishment, will be achieved when both these components are actually present in the accused's mind (a "subjective" test). A person who plans and executes a crime is considered, rightly or wrongly, a more serious danger to the public than one who acts spontaneously (perhaps because they are less likely to get caught), whether out of the sudden opportunity to steal, or out of anger to injure another. But intention can also come from the common law viewpoint as well.

 

The test of intention

 

The policy issue for those who administer the criminal justice system is that, when planning their actions, people may be aware of many probable and possible consequences. Obviously, all of these consequences could be prevented through the simple expedient either of ceasing the given activity or of taking action rather than refraining from action. So the decision to continue with the current plan means that all the foreseen consequences are to some extent intentional, i.e. within and not against the scope of each person's intention. But, is the test of culpability based on purely a subjective measure of what is in a person's mind, or does a court measure the degree of fault by using objective tools?

 

For example, suppose that A, a jealous wife, discovers that her husband is having a sexual affair with B. Wishing only to drive B away from the neighbourhood, she goes to B's house one night, pours petrol on and sets fire to the front door. B dies in the resulting fire. A is shocked and horrified. It did not occur to her that B might be physically in danger and there was no conscious plan in her mind to injure B when the fire began. But when A's behaviour is analysed, B's death must be intentional. If A had genuinely wished to avoid any possibility of injury to B, she would not have started the fire. Or, if verbally warning B to leave was not an option, she should have waited until B was seen to leave the house before starting the fire. As it was, she waited until night when it was more likely that B would be at home and there would be fewer people around to raise the alarm.

 

On a purely subjective basis, A intended to render B's house uninhabitable, so a reasonably substantial fire was required. The reasonable person would have foreseen a probability that people would be exposed to the risk of injury. Anyone in the house, neighbours, people passing by, and members of the fire service would all be in danger. The court therefore assesses the degree of probability that B or any other person might be in the house at that time of the night. The more certain the reasonable person would have been, the more justifiable it is to impute sufficient desire to convert what would otherwise only have been recklessness into intention to constitute the offence of murder. But if the degree of probability is lower, the court will find only recklessness proved. Some states used to have a rule that if a death occurred during the commission of a felony, sufficient mens rea for murder would automatically be imputed (see felony murder). For the most part, this rule has been abolished and direct evidence of the required mental components is required. Thus, the courts of most states use a hybrid test of intention, combining both subjective and objective elements, for each offence changed.

 

In English law, s8 Criminal Justice Act 1967 provides a statutory framework within which mens rea is assessed. It states:

A court or jury, in determining whether a person has committed an offence,

(a) shall not be bound in law to infer that he intended or foresaw a result of his actions by reasons only of its being a natural and probable consequence of those actions; but

(b) shall decide whether he did intend or foresee that result by reference to all the evidence, drawing such inferences from the evidence as appear proper in the circumstances.

 

Under s8(b) therefore, the jury is allowed a wide latitude in applying a hybrid test to impute intention or foresight (for the purposes of recklessness) on the basis of all the evidence.

 

Hope this helps....!

 

As always best wishes

 

Dougal

[enoughisenough]

Hi Dougal

 

well said. I think it's fairly clear that the intention to cause gain and loss as per s. 5 of the Fraud Act 2006 is present in how these companies operate. If any doubters out there think otherwise let's have your legal argument as to why. The prospectuses these sub primers issue are sufficient evidence of intent to cause loss via acts of commission and omission. I haven't yet seen any convincing argument or evidence to the contrary.

 

Keep the faith. EiE.

[Dougal16T]

Hi EiE and thanks,

I think the previous post and S8 of the Criminal Justice Act 1967, says it all!

 

Let's do it to them before they (keep) doing it to us!

 

As always

 

Dougal

[enoughisenough]

Agreed.

 

Any legal argument to the contrary out there?

 

Waiting...

[iconoclash]

Dickky - below extract is where I chose the phrase from: its not mine.....

 

Protection from Harrassment Act 1997: England and Wales

1.—(1) A person must not pursue a course of conduct—

(a) which amounts to harassment of another, and

(b) which he knows or ought to know amounts to harassment of

the other.

(2) For the purposes of this section, the person whose course of

conduct is in question ought to know that it amounts to harassment of

another if a reasonable person in possession of the same information

would think the course of conduct amounted to harassment of the other.

 

Yes - lets not get side tracked - theses companies are ****ing us and do know it

[iconoclash]

Hi - hope this isnt detracting from the debate - its just my exploration of the texts re securitization and intent... anyway, I note this point within the

Council of Mortgage Lenders Response issued Jan 2009, reference the Ministry of Justice Initial Review, it says:

"S101

9.2 If the question relates to the lender’s power of sale under the LPA then the cost to the industry would be considerable and we do not think we can overstress the impact this would have. Restrictions on the power of sale could, at their worst, effectively convert secured lending into unsecured lending. Secured lending is predicated on the basis that if the borrower does not pay then ultimately once all other reasonable attempts have failed the money is recovered through the asset.

9.3 The power of sale is not a self help remedy. It is the fundamental principle on which secured lending is based. The ability of lenders to realise their security is essential and any removal or watering down of this ability could have severe repercussions for the mortgage market. The lender’s power of sale must not be removed or watered down.

9.4 Change would have a major impact on borrowers. Without the power of sale a lender would effectively be looking solely at the borrower’s ability to pay rather than the situation in the round ie the asset involved. This will severely limit lenders’ risk and underwriting appetites. In turn this would mean that any lending would only be to those borrowers able to provide the safest of covenants to pay. Loans are priced on the basis that they are secured and any threat to that security would add to the cost of credit. It would severely limit availability of credit to a very large number of potential borrowers.

9.5 This would be very extremely damaging to consumers and the economy in any economic climate but at a time when lending is already restricted and government aspirations are for lenders to increase that lending it would seem highly inadvisable for any limitation on the power of sale to be introduced. We are not sure how this matches the government’s desire for a return to 2007 lending levels and for a high level of owner occupation.

9.6 The level of the amount loaned for mortgage finance is far greater than in most unsecured situations. It would be far more difficult for lenders to absorb any unpaid debt and again this would act as a major barrier to lending.

9.7 Removal of the power of would presumably prevent any future funding through securitisation etc.

9.8 There is also the question of moral hazard. We understand that experiences with the water industry have shown that once an ultimate sanction is removed (in that case the supply of water) then there is far less impetus on a debtor to meet commitments.

9.9 For individual loans i.e. where the mortgagee is an individual (such as inter family loans) there may be human rights considerations.

9.10 Securitisation – in a securitisation a lender will be generally be required to give warranties which will include representations that a power of sale subsists in the mortgages that are securitised. These representations have been given in securitisations that have already taken place and, depending on terms, lenders would be placed in breach of warranty.

9.11 The additional items listed above in the introductory section give the borrower great protection. In particular MCOB and the newly introduced pre-action protocol ensure fair treatment of customers.

9.12 If the current statutory powers were changed or revised there would be a considerable administrative impact on the industry and we think that a full impact assessment would need to be conducted.

9.13 As well as securitisation contracts referred to in 9.10 any change could impact on other existing contracts and lenders’ terms and conditions and the effect of this would need to be reviewed carefully."

 

give warranties to whom? the investors?

Edited July 29, 2009 by iconoclash
typo

[enoughisenough]

Hi campari2

 

interesting posts. The investors need certain warranties. Chief amongst these is that there is no impediment to a realisation of security. This is why the beneficial rights are vested in the trustee. This is why when people argue that the spv should bring a claim they are probably mistaken. It is the trustee that should bring the claim or at least be a joinder to the claim. No doubt somebody will be along to shoot me down in flames soon!

[iconoclash]

Hi EIE, thanks, meantime another little snippet:

Taken from Wiki contracts, Rights of Third Parties Act 1999.(reform of the Common Law, Doctrine of Privity).

 

Usually the transfer of ownership of real estate is registered at a cadastre in the United Kingdom. In most parts of the United States, deeds must be submitted to the Recorder of deeds, who acts as a cadastre, to be registered. An unrecorded deed may be valid proof of ownership between the parties, but may have no effect upon third-party claims until disclosed or recorded. A local statute may prescribe a period beyond which unrecorded deeds become void as to third-parties, at least as to intervening acts.

 

Tell me to stop if this is confusing the case eh:)

Edited July 29, 2009 by iconoclash
another typo!

[diddydicky]

We are not just a capitalist society. We are a regulated economy based o the rule of law. If child labour makes me a profit that is not the beginning middle and end of it is it?

h

 

true - but the child doesn't sign a contract does he!

[diddydicky]

Hi Dougal

 

well said. I think it's fairly clear that the intention to cause gain and loss as per s. 5 of the Fraud Act 2006 is present in how these companies operate. If any doubters out there think otherwise let's have your legal argument as to why. The prospectuses these sub primers issue are sufficient evidence of intent to cause loss via acts of commission and omission. I haven't yet seen any convincing argument or evidence to the contrary.

 

Keep the faith. EiE.

 

spot on

 

"The intent is to cause gain"

 

the person seeking to cause gain has done so in a society which actively allows , permits and encourages him to do in the course of a bona fide business activity- indeed he may well be disciplined or lose his job under his contract of employment if he fails to do so

 

now all you have to do is persuade the courts that the person who works for one of the worlds biggest financial institions and whose contract of employment in 2003 in which his job description is to "make financial gains (profits)

 

has now had his terms of employment changed by someone he doesnt even work for in 2006 and told that his term of employment is now changed from a duty to make gains is now a dishonest attempt to defraud people

 

 

an d what advice, pray tell will you give this poor unfortunate creature when he comes on the consumer advice forum and asks you to help him because the terms and conditions of his contract have been changed without any prior consultation with him!

[Dougal16T]

Hello,

 

Just a small point:

 

See S8 of the Criminal Justice Act 1967. It shows how intent may now be inferred..............

 

Evening all

 

 

Dougal

[Suetonius]

BUT no one has mentioned the CRUCIAL bit- and that is that ALL that has been mentioned as acts which lead towards the "offence" are predicated on DISHONESTY- for dishonesty to be proved you would still have to prove an INTENT to act fraudulently

 

Could not agree more with the importantance of dishonesty with regard to the Fraud Act 2006.

Dishonesty

 

The definition of dishonesty was established in R v Ghosh [1982] Q.B.1053 and as a result is subject to a two stage test.

 

The Lord Chief Justice said:

 

"In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.

 

If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest. In most cases, where the actions are obviously dishonest by ordinary standards, there will be no doubt about it. It will be obvious that the defendant himself knew that he was acting dishonestly. It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did."

What is/are the actual act(s) / omission(s) of lenders that is being argued to be fraud under the Fraud Act 2006?

 

If we were to apply the Fraud Act 2006 to (for arguments sake) securitisation, the questions to establish if a lender was acting dishonestly would be:

 

1) According to the ordinary standards of reasonable and honest people, is the act of securitisation dishonest.

 

If the answer was yes, the second question is then asked,

 

2) Did the lender consider that according to the ordinary standards of reasonable and honest people is the act of securitisation dishonest.

 

 

 

Edited July 29, 2009 by Suetonius
Added a little extra

[foolishgirl]

2) Did the lender consider that according to the ordinary standards of reasonable and honest people is the act of securitisation dishonest.

 

And how many lenders would say 'yes' to this - even with hand on hearts???

 

 

Nice to see you again suetonius

[diddydicky]

 

Could not agree more with the importantance of dishonesty with regard to the Fraud Act 2006.

Dishonesty

 

The definition of dishonesty was established in R v Ghosh [1982] Q.B.1053 and as a result is subject to a two stage test.

 

The Lord Chief Justice said:

 

"In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.

 

If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest. In most cases, where the actions are obviously dishonest by ordinary standards, there will be no doubt about it. It will be obvious that the defendant himself knew that he was acting dishonestly. It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did."

What is/are the actual act(s) / omission(s) of lenders that is being argued to be fraud under the Fraud Act 2006?

 

If we were to apply the Fraud Act 2006 to (for arguments sake) securitisation, the questions to establish if a lender was acting dishonestly would be:

 

1) According to the ordinary standards of reasonable and honest people, is the act of securitisation dishonest.

 

If the answer was yes, the second question is then asked,

 

2) Did the lender consider that according to the ordinary standards of reasonable and honest people is the act of securitisation dishonest.

 

 

 

 

thanks- i would suspect that 11 out of the 12 jurors would not even know what secuirization was!!

[Suetonius]

 

Could not agree more with the importantance of dishonesty with regard to the Fraud Act 2006.

Dishonesty

 

The definition of dishonesty was established in R v Ghosh [1982] Q.B.1053 and as a result is subject to a two stage test.

 

The Lord Chief Justice said:

 

"In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.

 

If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest. In most cases, where the actions are obviously dishonest by ordinary standards, there will be no doubt about it. It will be obvious that the defendant himself knew that he was acting dishonestly. It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did."

What is/are the actual act(s) / omission(s) of lenders that is being argued to be fraud under the Fraud Act 2006?

 

If we were to apply the Fraud Act 2006 to (for arguments sake) securitisation, the questions to establish if a lender was acting dishonestly would be:

 

1) According to the ordinary standards of reasonable and honest people, is the act of securitisation dishonest.

 

If the answer was yes, the second question is then asked,

 

2) Did the lender consider that according to the ordinary standards of reasonable and honest people is the act of securitisation dishonest.

 

R v Ghosh [1982] Q.B.1053 is the most important case with regard to dishonesty.

 

However, there is also

 

Royal Brunei Airlines Snd Bhd v Tan[1995] 2 AC 378

 

and

 

Twinsectra Limited v. Yardley and Others [2002] UKHL 12

[Suetonius]

thanks- i would suspect that 11 out of the 12 jurors would not even know what secuirization was!!

 

There is also the fact that securitisation began in 1970, so has been around for nearly 40 years and following the implementation of the Special Liquidity Scheme, even the Bank of England has been involved.

 

Therefore, in response to the second stage of the dishonesty test, would it be reasonable to say that a lender would consider securitisation to be dishonest.

Edited July 29, 2009 by Suetonius
Added a link to Bank of England

[Suetonius]

And how many lenders would say 'yes' to this - even with hand on hearts???

 

 

Nice to see you again suetonius

 

 

 

Thanks Foolishgirl..

[foolishgirl]

thanks- i would suspect that 11 out of the 12 jurors would not even know what secuirization was!!

 

Exactly - but they soon will when the press really get a handle on the fact that not only does it apply to the so called sub-prime mortgage market but also Joe Public's credit cards, many of which he still has in his pocket with large balances to be discharged.

[Suetonius]

If any doubters out there think otherwise let's have your legal argument as to why.

Keep the faith. EiE.

 

Agreed.

 

Any legal argument to the contrary out there?

 

Waiting...

 

I would not want to keep you waiting EIE:wink:

 

As Dougal has said:

 

Let's not get sidetracked, shall we?

 

The important point is the Fraud Act 2006 and as has been pointed out the way that it is worded.

 

So let's look how the Fraud Act 2006 is worded.

 

The Fraud Act 2006, details three different ways that a person can be in breach of this act and guilty of fraud. (section 1)

 

1) by false representation, (Section 2)

2) by failing to disclose information and (Section 3)

3) by abuse of position. (Section 4)

 

If we look at each section seperately:

 

Section 1

(1) A person is guilty of fraud if he is in breach of any of the sections listed in subsection (2)

 

Section 2

1) A person is in breach of this section if he— (a) dishonestly makes a false representation

 

Section 3

A person is in breach of this section if he—

(a) dishonestly fails to disclose to another person information which he is under a legal duty to disclose, and

 

Section 4

(1) A person is in breach of this section if he—

(a) occupies a position in which he is expected to safeguard, or not to act against, the financial interests of another person,

(b) dishonestly abuses that position, and

 

The above extracts each state that to breach the act and therefore commit fraud "a person" must perform a certain action (make a false representation, fail to disclose or abuse his position) "dishonestly"

 

In my humble opinion, it is the use of the term dishonestly and the meaning of this term that is the key to identify if a breach of the act has in fact occurred.

 

This has also been mentioned previously by both EIE and Dougal:

 

Section 4: Fraud by abuse of position

 

Section 4 makes it an offence to commit a fraud by dishonestly abusing one's position.

 

The defendant must have been dishonest, and have intended to make a gain or to cause a loss to another.

 

In addition, the defendant must carry out one of these acts:

 

1.Making a false or misleading representation.

 

2.Failing to disclose to another person information which he is under a legal duty to disclose.

 

3.Abusing a position of trust.

 

This directly brings me back to my original post made in this thread:

 

 

Could not agree more with the importantance of dishonesty with regard to the Fraud Act 2006.

Dishonesty

 

The definition of dishonesty was established in R v Ghosh [1982] Q.B.1053 and as a result is subject to a two stage test.

 

The Lord Chief Justice said:

 

"In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.

 

If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest. In most cases, where the actions are obviously dishonest by ordinary standards, there will be no doubt about it. It will be obvious that the defendant himself knew that he was acting dishonestly. It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did."

What is/are the actual act(s) / omission(s) of lenders that is being argued to be fraud under the Fraud Act 2006?

 

If we were to apply the Fraud Act 2006 to (for arguments sake) securitisation, the questions to establish if a lender was acting dishonestly would be:

 

1) According to the ordinary standards of reasonable and honest people, is the act of securitisation dishonest.

 

If the answer was yes, the second question is then asked,

 

2) Did the lender consider that according to the ordinary standards of reasonable and honest people is the act of securitisation dishonest.

 

Therefore, in my humble opinion section 2,3 and 4 of the Fraud Act 2006 are subject to the two stage dishonesty test that was established by R v Ghosh.

 

If this is the case, for a person to be guilty of fraud (as definded by s.1 of the Fraud Act 2006) the answer to the second question must also be yes.

 

If we are realistic, would a lender consider that according to the ordinary standards of reasonable and honest people, the act of securitisation is dishonest?

 

Therefore, in my personal opinion it is immaterial if a gain/loss (section 5, Fraud Act 2006) was made, unless it has first been established that the lender acted dishonestly (subject to the R v Ghosh test).

 

Does anyone contend that the dishonesty test is not applicable ?

Edited July 30, 2009 by Suetonius

[enoughisenough]

Sorry Sue

 

if my questions caused confusion l meant only to raise the simple question of whether an equitable assignment involves full consideration that's all. Hope that clarifies.

 

What are your answers to 1 & 2 above. I am going in to a real life fight tomorrow to keep the roof over our heads so any real advice would be appreciated