Definition of “Fraud”

Fraud

Fraud: An intentional dishonest act or omission done with the purpose of deceiving.

Fraud is commonly understood as dishonesty calculated for advantage. A person who is dishonest may be called a fraud.

Fraud may mean:

  • (i) a tort consisting in a knowing misrepresentation made with the intention that the person receiving that misrepresentation should act on it;
  • (ii) the misrepresentation resulting in the tort;
  • (iii) a tort consisting in a representation made recklessly without any belief in its truth, but made with the intention that the person receiving that misrepresentation should act on it;
  • (iv) a misrepresentation made recklessly without any believe in its truth;
  • (v) unconscionable dealing short of actionable deceit at common law;
  • (vi) in the context of a conspiracy to defraud, a surreptitious taking of property without deception; or
  • (vii) in the law of contract, an unconscientious use of power arising out of the relative positions of the parties and resulting in an unconscionable bargain

    “Equitable Fraud”

    The scope of “Fraud” in equity is much wider than under the common law.

    Viscount Haldane LC in Nocton v Lord Ashburton [1914] AC 932 at 954 stated:

    “…When fraud is referred to in the wider sense in which the books are full of the expression, used in Chancery in describing cases which were within its exclusive jurisdiction, it is a mistake to suppose that an actual intention to cheat must always be proved. A man may misconceive the extent of the obligations which a court of Equity imposes on him. His fault is that he has violated, however innocently because of his ignorance, an obligation which he must be taken by the Court to have known, and his conduct has in that sense always been called fraudulent, even in such a case as a technical fraud on a power…….What it really means in this connection is, not moral fraud in the ordinary sense, but breach of the sort of obligations which is enforced by a court that from the beginning regarded itself as a court of conscience.”

    The definition of fraud was considered in Maleski v Hampson [2013] NSWSC 1794

    24. According to the Encyclopaedic Australian Legal Dictionary (LexisNexis, 2013), the definition of fraud is “an intentional dishonest act or omission done with the purpose of deceiving.”

    25. Actual fraud is defined as “at common law, an act or omission done for an intentionally deceitful purpose or with reckless indifference as to the truth or falsity of a representation: Derry v Peek [1889] UKHL 1; (1889) 14 App Cas 337 ; [1886-90] All ER Rep 1 . Actual fraud is distinguished from equitable fraud, which focuses on the conscience and motives of the party: for example, Armitage v Nurse [1997] EWCA Civ 1279; [1998] Ch 241 ; [1997] 2 All ER 705; [1997] 3 WLR 1046″.

    26. The defendant also pleads constructive fraud. “Constructive fraud” that is also defined in the Encyclopaedic Australian Legal Dictionary as “the fraudulent breach of an obligation, enforced by a court of conscience. An actual intention to cheat need not be proved; this distinguishes constructive fraud from actual fraud. Conduct will be regarded as constructive fraud when a person violates, however innocently, an obligation that a court of equity will assume was known to the person: Nocton v Lord Ashburton [1914] AC 932 ; [1914-15] All ER Rep 45″.

    Harrison AsJ stated in Maleski v Hampson [2013] NSWSC 1794 at [24-26]:

    According to the Encyclopaedic Australian Legal Dictionary (LexisNexis, 2013), the definition of fraud is “an intentional dishonest act or omission done with the purpose of deceiving.”

    Actual fraud is defined as “at common law, an act or omission done for an intentionally deceitful purpose or with reckless indifference as to the truth or falsity of a representation: Derry v Peek [1889] UKHL 1; (1889) 14 App Cas 337 ; [1886-90] All ER Rep 1 . Actual fraud is distinguished from equitable fraud, which focuses on the conscience and motives of the party: for example, Armitage v Nurse [1997] EWCA Civ 1279; [1998] Ch 241 ; [1997] 2 All ER 705; [1997] 3 WLR 1046″.

    The defendant also pleads constructive fraud. “Constructive fraud” that is also defined in the Encyclopaedic Australian Legal Dictionary as “the fraudulent breach of an obligation, enforced by a court of conscience. An actual intention to cheat need not be proved; this distinguishes constructive fraud from actual fraud. Conduct will be regarded as constructive fraud when a person violates, however innocently, an obligation that a court of equity will assume was known to the person: Nocton v Lord Ashburton [1914] AC 932 ; [1914-15] All ER Rep 45″.


    Fraus est celare fraudemIt is fraud to conceal fraud


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    This tab updated on 15 March 2015