R v Hunter [2021] EWCA Crim 1785

Hunter and Smith operated a ticket touting business using bots and false identities to bulk-purchase tickets in breach of vendors' terms, then resold them at inflated prices on secondary websites without warning consumers of cancellation risks. Their convictions for fraudulent trading under s.993 Companies Act 2006 were upheld, establishing that systematic deception in ticket resale constitutes criminal fraud.

Facts

Peter Hunter and David Smith were directors of BZZ Limited (formerly Ticket Wiz Limited), a company engaged in purchasing tickets for popular sporting and entertainment events and reselling them at substantial premiums on secondary ticketing websites. The appellants used sophisticated software known as ‘bots’, multiple false identities, and credit cards in various names to circumvent restrictions imposed by primary ticket sellers limiting purchase quantities and prohibiting resale. They systematically deceived ticket vendors into believing purchasers were ordinary consumers rather than commercial ticket touts. Tickets acquired through this harvesting method were resold on secondary websites without warning consumers of the risk that tickets might be cancelled by event organisers. During the indictment period (June 2015 to December 2017), the appellants made an outlay of approximately £4 million and obtained returns exceeding £10.8 million.

The Business System

The appellants employed an ‘Insomniac Browser’ enabling multiple simultaneous sessions appearing as distinct computers, ‘Roboform Software’ storing 105 identities with credit card details, and ‘spinner bots’ for specific ticketing websites. They possessed 112 physical payment cards in 35 different names. When tickets were purchased using false addresses, the appellants would telephone vendors to redirect delivery to their business premises.

Issues

The appeal raised several novel legal questions:

• Whether the statutory offence under section 993 Companies Act 2006 requires proof of deception or intention to deceive
• Whether there must be a victim who suffers actual or intended harm
• Whether the common law limitations on conspiracy to defraud govern the statutory offence
• Whether ticket resale restrictions were unfair under the Consumer Rights Act 2015
• The legal status of a ticket and whether ‘equity’s darling’ doctrine protected consumers

Judgment

The Court of Appeal dismissed all appeals and the application to adduce fresh evidence.

The Statutory Offence

Lord Justice Green analysed section 993 CA 2006, identifying three components: that any business is carried on; for a fraudulent purpose; and the defendant is knowingly party to that carrying on. The Court held that common law limitations on conspiracy to defraud do not constrain the statutory offence:

“the words in section 993 must be given their ordinary and natural meaning – ‘a fraudulent purpose’ does not mean only those limited purposes enumerated under the common law.”

Regarding the requirement for deception, the Court stated:

“There is no requirement for the Prosecution to prove an intention to deceive third parties in order to prove a fraudulent purpose.”

The Test for Dishonesty

The Court approved the classic formulation of dishonesty from Re Patrick & Lyon [1933] as:

“involving, according to the current notions of fair trading amongst commercial men, real moral blame”

and the description from Welham v DPP [1961] as:

“stepping beyond the bounds of what ordinary decent people engaged in business would regard as honest.”

Consumer Protection Issues

The Court determined that restrictive terms imposed by ticket vendors were not unfair under the Consumer Rights Act 2015. The object behind restrictions was legitimate consumer protection:

“The terms seek to address a reprehensible and widespread, and otherwise criminal, practice which operates significantly to the detriment of consumers. This is in our view a compelling starting point.”

Legal Status of Tickets

The Court confirmed that:

“In law a ticket is evidence or proof of two things. First, a right to enter land as a licensee and not as a trespasser. Secondly, as proof of a right to receive a service, namely that to be performed or provided on the land.”

When tickets transfer, restrictions upon use transfer with them.

Implications

This judgment establishes important precedents for prosecuting ticket touting as criminal fraud. It confirms that systematic deception of ticket vendors and failure to warn consumers of cancellation risks can constitute carrying on business for a fraudulent purpose under section 993 CA 2006. The judgment clarifies that the statutory offence is broader than common law conspiracy to defraud and does not require proof of harm to proprietary interests in the narrow sense. The Court’s analysis provides guidance on the application of consumer protection legislation to ticketing markets and confirms that restrictions designed to prevent secondary markets are capable of being fair and enforceable. The decision has significant implications for the secondary ticketing industry, with the Court noting that if similar practices are widespread, the market may be characterised by criminal fraud warranting broader enforcement action.

Verdict: Appeals dismissed. The convictions for fraudulent trading contrary to section 993(1) Companies Act 2006 and possession of articles for use in fraud contrary to section 6(1) Fraud Act 2006 were upheld as entirely safe.

Source: R v Hunter [2021] EWCA Crim 1785