united-kingdom fraud fiduciary-duties
Is this fraud by abuse of position?
<p>An acquaintance of mine is the leaseholder of a flat. The management company for the block has appointed Ms P to be the person specifically responsible for this block. Ms P has awarded a significant part of the maintenance work to Cleaning Ltd without going through the usual tender process. The work done by Cleaning Ltd was shoddy and not good value for money. According to Companies House, Cleaning Ltd is at least 75% owned by Mr Q, who shares a home address with Ms P. Companies House also shows that Ms P and Mr Q were previously both directors of another company, now dissolved.</p>

<p>The UK <a href="http://www.legislation.gov.uk/ukpga/2006/35/pdfs/ukpga_20060035_en.pdf" rel="nofollow noreferrer">Fraud Act 2006</a> includes:</p>

<blockquote>
  <p>4 Fraud by abuse of position</p>
  
  <p>(1) A person is in breach of this section if he—</p>
  
  <blockquote>
    <p>(a) occupies a position in which he is expected to safeguard, or not to act
    against, the financial interests of another person,</p>
    
    <p>(b) dishonestly abuses that position, and</p>
    
    <p>(c) intends, by means of the abuse of that position—
    (i)
    to make a gain for himself or another, or
    (ii)
    to cause loss to another or to expose another to a risk of loss.</p>
  </blockquote>
  
  <p>(2)
  A  person  may  be  regarded  as  having  abused  his  position  even  though  his conduct consisted of an omission rather than an act.</p>
</blockquote>

<p>Clearly Miss P has failed in her fiduciary duty, and the management company has paid compensation accordingly. My question is, does the conduct of Ms P and Mr Q rise to the level of fraud?</p>

<p><strong>Edit:</strong> The management company has already paid compensation for this; I was wondering about criminal fraud rather than civil actions to recover damages.</p>

<blockquote>
  <p>does the conduct of Ms P and Mr Q rise to the level of fraud?</p>
</blockquote>

<p>Yes, it does if it can be proved that Ms P's misconduct actually caused losses to her employer or other <em>cognizable</em> stakeholders. The only entities with standing to proceed against Ms P are the ones incurring losses as a result of Ms P's conflict of interest.</p>

<p>Your inquiry does not reflect how or whether the misconduct reasonably affects the leaseholder. Thus, my presumption is that the leaseholder only pays the landlord or management company a pre-established fee and has no cognizable interest in the company's internal affairs (such as Ms P's work performance).</p>

<p>A viable claim against Mr Q would require proving additional conditions and/or knowing the contract between Mr Q and the management company, neither of which are palpable in your inquiry. But the aforementioned remark on <em>standing</em> applies here as well.</p>
