Introduction

Hunter & Anor v R ([2021] EWCA Crim 1785) is a pivotal judgment from the England and Wales Court of Appeal (Criminal Division) delivered on November 26, 2021. This case revolves around the criminal activities of Peter Hunter and David Smith, who were convicted for fraudulent trading under Section 993(1) of the Companies Act 2006 ("CA 2006") and possession or control of articles for use in fraud under Section 6(1) of the Fraud Act 2006 ("FA 2006").

The appellants challenged their convictions, raising significant legal questions concerning the practice known as "ticket touting"—the bulk acquisition of event tickets using sophisticated software and bots, followed by their resale at inflated prices on secondary ticketing platforms (STWs). This case not only scrutinizes the legality of such practices but also delves into the interplay between statutory offenses and common law, as well as the application of consumer protection laws.

Summary of the Judgment

The Court of Appeal dismissed the appeals brought by Hunter and Smith, upholding their convictions. The primary rationale was that the appellants’ business practices constituted fraudulent trading by intentionally circumventing contractual restrictions imposed by primary ticket sellers (PTS) and primary ticketing websites (PTW). The use of bots and multiple false identities to harvest tickets was deemed deceptive and harmful to both consumers and legitimate ticket vendors.

Additionally, the court rejected the appellants' attempts to introduce fresh evidence regarding alleged corporate collusion between PTWs and STWs, affirming that such evidence was neither new nor admissible. The judgment further clarified the distinction between statutory offenses under CA 2006 and FA 2006 and common law offenses, reinforcing that statutory provisions should not be unduly limited by common law constraints.

The court also addressed issues related to the fairness of ticket vendors' terms and conditions under the Consumer Rights Act 2015 ("CRA 2015"), ultimately finding that the restrictions were clear, lawful, and served legitimate consumer protection purposes.

Analysis

Precedents Cited

The judgment references several key cases and reports that influenced the court's decision:

• R v Evans [2014]: Clarified the need for proving a proprietary interest in common law conspiracy to defraud, which the court determined did not constrain the statutory offense under CA 2006.
• R v Hayes [2015] EWCA Crim 46: Reinforced the inadequacy of narrow common law definitions in addressing modern fraudulent activities.
• Re Patrick & Lyon [1933]: Established the test for dishonesty in fraud cases.
• In Morphitis v Bernasconi [2003]: Emphasized that intent to defraud does not necessitate an actual victim.
• Waterson Report 2015: An independent review focusing on consumer protection in secondary ticketing, which provided context on ticket resale practices and associated consumer risks.

These precedents collectively informed the court’s understanding of fraudulent trading, the necessity (or lack thereof) of proving deception or actual harm, and the appropriate interpretation of statutory language in the context of evolving market practices.

Legal Reasoning

The court's legal reasoning hinged on several critical aspects:

• Statutory Interpretation: Section 993(1) CA 2006 was interpreted to encompass any fraudulent purpose in business activities, without the necessity of proving an intention to deceive or an actual victim. The court emphasized that the statute's language should be given its ordinary meaning, uninfluenced by common law limitations.
• Nature of Ticket Touting: The appellants' use of bots and multiple identities to purchase tickets in bulk was classified as a deliberate attempt to mislead ticket vendors into believing they were genuine consumers, thereby constituting fraudulent trading.
• Consumer Protection: The court acknowledged that the terms and conditions imposed by ticket vendors were designed to protect consumers from inflated prices and the risk of ticket cancellation. The fairness of these terms was upheld as they were deemed clear, transparent, and serving legitimate consumer interests under CRA 2015.
• Exclusion of Fresh Evidence: The attempted introduction of new evidence regarding corporate relationships between PTWs and STWs was dismissed on the grounds that it was neither genuinely new nor met the threshold for admissibility under section 23 CAA 1968.
• Jury Directions: The judge’s instructions to the jury were found appropriate and sufficient, ensuring that complex legal concepts were conveyed without bias or undue influence.

The court maintained that statutory offenses should not be constrained by common law limitations, particularly in cases involving sophisticated fraudulent schemes that exploit modern digital marketplaces.

Impact

This judgment has several notable implications for future cases and the broader legal landscape:

• Broad Interpretation of Fraudulent Purpose: By affirming that any fraudulent purpose is sufficient for the offense without needing to prove deception or actual harm, the court provides a robust framework to tackle modern frauds that may not have immediate or identifiable victims.
• Limitations on Common Law Offenses: The decision reinforces the primacy of statutory law over common law in defining criminal offenses, particularly in commercial contexts, ensuring that legislative intent is upheld.
• Enhanced Consumer Protection: Upholding the fairness of ticket vendors' terms under CRA 2015 sets a precedent for enforcing transparent and consumer-friendly contractual terms in secondary markets.
• Discouragement of Sophisticated Fraudulent Practices: The clear legal stance against using bots and deceptive practices in ticket sales acts as a deterrent against similar entrepreneurial frauds in digital and other secondary marketplaces.

Overall, the judgment strengthens legal mechanisms to address and mitigate sophisticated fraudulent activities that exploit digital platforms and consumer markets.

Complex Concepts Simplified

Fraudulent Trading under CA 2006

Section 993(1) Companies Act 2006 makes it an offense to carry on any business with a fraudulent purpose. In this case, the fraudulent purpose involved using deceptive means to buy tickets in bulk and resell them at inflated prices.

Use of Bots and Ticket Harvesting

Bots are automated software programs that can quickly and efficiently purchase large numbers of tickets, bypassing restrictions set by primary ticket sellers. Ticket harvesting refers to the bulk acquisition of tickets using such bots, often leading to resales at much higher prices on secondary platforms.

Consumer Rights Act 2015 (CRA 2015)

This act protects consumers from unfair terms in contracts. In the context of this case, it examined whether the ticket vendors' terms restricting resale were fair and transparent. The court upheld these terms as they served legitimate consumer protection purposes by preventing inflated resale prices.

Common Law vs. Statutory Offenses

Common law offenses are traditional crimes established through judicial decisions, while statutory offenses are defined by legislation. The court clarified that statutory offenses, like those under CA 2006 and FA 2006, should not be limited by common law definitions.

"Equities Darling" Doctrine

This legal principle traditionally applies to property rights, ensuring innocent purchasers receive clear title even if acquired through fraudulent means. However, the court determined that it does not apply to cases like ticket touting fraud, where the transaction involves licenses or services rather than property rights.

Conclusion

The Hunter & Anor v R judgment serves as a landmark case in the realm of commercial fraud, particularly in the digital ticketing market. By affirming the broad interpretation of fraudulent purposes under statutory law and rejecting the imposition of common law limitations, the court has fortified the legal framework against sophisticated fraudulent schemes like ticket touting.

Upholding the fairness and enforceability of ticket vendors' terms underlines the judiciary's commitment to consumer protection, ensuring that deceptive practices are effectively curtailed. This case underscores the necessity for clear legislative definitions and robust judicial interpretations to address evolving fraudulent tactics in digital marketplaces.

Moving forward, this judgment provides a clear precedent for prosecuting complex commercial frauds, balancing statutory intent with the practical realities of modern digital commerce. It also emphasizes the importance of transparent and fair contractual terms in safeguarding consumer interests against exploitative business practices.