View/Open - Research Commons - The University of Waikato

10.3.1.3 For any other Fraudulent Purposes
Another aspect of fraudulent trading is when the company is carrying on business
for any fraudulent purposes. The phrase „fraudulent purposes‟ has not been
clearly defined by the court. In R v Inman, 115 the court clarified that fraudulent
trading consists of two different types of offences, namely fraudulent trading with
intent, and fraudulent trading for the purpose of achieving certain things. From
the judgement, it is clear that the two phrases should be read disjunctively and
that they refer to different circumstances.
It seems that the court in that case distinguishes fraudulent purposes based on
whether carrying on business would achieve certain objectives from intent to
defraud and for that intent to be present, the state of mind of directors is
important. The court, however, did not discuss further what is meant by „certain
things‟. The court in Aktieselskabet Dansk Skibsfinansiering v Brothers 116 also
discussed the existence of „something else‟ such as misrepresentation, deception
or personal gain before fraud can be inferred.
In an unreported case of Re Murray-Watson Ltd 117 which was cited by Lord
Templeman in Re Gerald Cooper Chemicals Ltd 118 , Oliver J gave as an example
the director of a company dealing with second-hand motor cars who wilfully
misrepresents the age and capabilities of the vehicle. He held that the director
could not be carrying on a business for fraudulent purposes, although the business
was carried out in a fraudulent manner.
In light of these decisions, it is submitted that „fraudulent purposes‟ may cover
situations where the directors have obtained personal advantage by carrying on
115 [1967] 1 QB 140 at 148.
116 [2001] 2 BCLC 324 at 332
117 6 April 1977.
118 [1967] Ch 262 at 267.
253