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High Court reaffirms classic fraud definition in Scots law
The classic definition of fraud in Scots law survived an attempt to challenge it in the prosecution of Craig Whyte over his purchase of shares in Rangers Football Club, an opinion of the High Court of Justiciary now published discloses.
Three appeal judges gave their ruling in March, ahead of the trial in which Mr Whyte was ultimately cleared earlier this month of fraud allegedly committed when he acquired a majority shareholding of the club for £1 in May 2011, while agreeing to take on obligations of over £20m in debt. The charges, one at common law and one under ss 678 and 680 of the Companies Act 2006, stated that he had used the club's own money while claiming the funds were his.
Ahead of the trial, his counsel Donald Findlay QC had challenged the relevancy of the charges. The trial judge had repelled the pleas to the relevancy; leave to appeal was granted only in relation to the common law charge.
On appeal Mr Findlay argued that the 1925 case of Adcock v Archibald, the standard authority for the present law, should be reconsidered by a larger court. Adcock stated that fraud did not require the person defrauded to have suffered some pecuniary loss; it was enough that a false pretence had been made dishonestly in order to bring about some definite practical result, and that result had been achieved. It was argued that this was out of line with earlier authority that described fraud as an offence against property; the decision was also criticised in the current edition of Gordon's Criminal Law.
Lady Dorrian, the Lord Justice Clerk, who sat with Lords Turnbull and Clarke, refused the appeal. Delivering the opinion of the court, Lady Dorrian said the earlier decision had to be read in the context of the acts charged there, and it too could be analysed in terms of achieving a practical result by a false and dishonest representation. She pointed out that it had been recognised in that case that if a detective stepped in immediately after someone had been induced by a false pretence to hand over money, and the other party had immediately given the money back, the crime would still have been committed.
The court was not persuaded by the criticisms in Gordon, which seemed to the judges to contain a proviso that undermined what was argued there. "It seems to accept that there are circumstances in which the principle, as enunciated in Adcock might properly be applied, without specifying what these may be", Lady Dorrian said. "Such an approach would in our view involve the introduction of uncertainty into the application of the law in this area and would not provide a definition of fraud based on clear objective criteria, applicable in all cases where the crime of fraud can be said to have been committed. By contrast, the principle in Adcock has the virtue of being clear, objective, sufficiently flexible to address changing commercial situations, and which apparently has worked successfully for over 90 years.
She concluded: "It must be borne in mind that the initiating point of the offence of fraud is a dishonest misrepresentation of fact which is designed to bring about the practical result which eventuates. There must be a definite practical result which is causally connected to the pretence. These components of the definition of fraud are important safeguards against the criminalisation of innocent behaviour, or mere lies. In our view there is no need to convene a larger court to reconsider Adcock and this appeal must be refused.
Click here to view the opinion of the court.