Common Defences to Fraud Charges in NSW

Fraud in New South Wales is primarily prosecuted under Part 4AA of the Crimes Act 1900 (NSW). To convict, the prosecution must prove beyond reasonable doubt that the accused, by deception, dishonestly obtained property, a financial advantage, or caused a financial disadvantage to another person. Many legal defences focus on challenging one or more of these essential elements or raising a legally recognised excuse for the conduct.

Lack of Dishonesty

Dishonesty is a core element of fraud under Section 192E. The prosecution must prove that the accused acted dishonestly according to the standards of ordinary people and that the accused knew their conduct was dishonest by those standards.

Key points about this defence:

• Dishonesty is assessed objectively (ordinary community standards) and subjectively (whether the accused knew their conduct was dishonest).
• If the accused genuinely did not know their conduct was dishonest, this may negate the mental element required for conviction.
• It may arise when internal accounting practices or ambiguous instructions make the conduct appear non-dishonest on the evidence.

Unlike some statutory defences, this is not a separate listed “defence”; rather, it undermines the prosecution’s ability to prove an essential element of the offence.

Lack of Deception or Failure of Causation

Under Section 192E, fraud must be committed “by deception”, meaning any deception by words or conduct as to fact or law that directly causes the financial benefit or loss.

Where this defence may arise:

• Conduct was not actually deceptive , e.g., statements were true or not misleading.
• The alleged advantage was not caused by any deception, for example, the loss or gain was due to lawful entitlement or market conditions.
• There was no causal connection between the deception and any harm or benefit.

If deception cannot be established or linked to the alleged outcome, the prosecution may fail to prove the offence.

Honest Claim of Right

A claim of right is a recognised defence in NSW criminal law where the accused honestly believes they have a legal right to the property or financial advantage they obtained.

When it may apply:

• Disputes over ownership, entitlement to funds, or contract rights.
• Misunderstandings about legal entitlements where the accused sincerely believed they were justified.

This defence does not require the belief to be reasonable, only genuinely held, making it a powerful tool in appropriate factual circumstances.

Mistake of Fact

Where an accused’s conduct is based on a genuine mistake of fact, it may negate the necessary intention or dishonesty required for fraud. For example:

• Believing that paperwork accurately reflected a true entitlement.
• Holding an honest belief that a transaction was authorised despite procedural irregularities.

A mistake of fact must be more than mere disagreement with the prosecution’s version; it must be genuinely held based on the evidence.

Lack of Intent

Section 192E requires the deception to cause the accused to obtain a financial advantage or to cause a financial disadvantage to another.

Defences in this category include:

• Arguing there was no intention to benefit oneself or harm another.
• Conduct was incidental or without requisite fault.
• The accused’s actions were accidental or clerical, without purposeful deceit.

Where the requisite intention (mens rea) is absent, the charge may not stand.

Duress

Duress may operate as a defence where the accused committed the offence because of a threat of death or serious injury or other compelling pressures that left them with no reasonable alternative.

Essentials of duress:

• A credible threat to self or others.
• A reasonable person in the same situation would have acted similarly.
• The accused’s actions were directly caused by this threat.

Duress is usually difficult to establish but can be applicable in cases involving coercion by third parties.

Necessity

Though rarely successful, necessity may be argued where the accused committed the act to prevent a greater harm. For example, to prevent imminent personal danger or serious loss.

The test for necessity requires:

• An imminent threat,
• No reasonable legal alternative,
• The conduct was proportionate to the threat.

This defence is fact-specific and not frequently successful in fraud cases.

Mental Impairment or Cognitive Defect

Where an accused suffers from mental illness or cognitive impairment that affected their ability to understand the nature or wrongfulness of their conduct, this may qualify as a defence or a factor in mitigation.

Key features:

• A mental condition undermines capacity to form the requisite intent.
• Can be raised under general criminal law principles separate from the statutory fraud provisions.
• If successful, it may lead to a finding of not guilty or a special verdict under mental health legislation.

Absence of Financial Advantage or Disadvantage

Fraud under s 192E requires proof that the accused obtained a financial advantage or caused a financial disadvantage. Even where deception is alleged, the offence is not made out unless this element is satisfied.

This issue commonly arises where:

• no money or property was actually obtained;
• the alleged “advantage” was temporary, illusory, or reversed;
• the complainant suffered no real financial detriment; or
• the accused was already legally entitled to the benefit in question.

If no advantage or disadvantage can be established on the evidence, the prosecution may fail to prove an essential element of the offence.

“……” — Skye, Lamont Law