Recklessness

Reckless knowledge involves a subjective and objective component. These are what the individual themselves thought (subjective) and what an ordinary person in the same circumstances would have considered reasonable (objective). For example:

• the partner perceived that there was a risk, or that a set of circumstances existed, and decided to proceed or run the risk regardless (subjective) and
• the partner's decision to run the risk was unreasonable based on what an ordinary person, in the same circumstances, would have considered reasonable (objective)

Examples include, but are not limited to:

• if a partner inquires and forms a belief that fraud is being committed, but stays silent and benefits from their beneficiary partner's fraud, that person could be said to have reckless knowledge
• if a partner does not make any inquiries, or turn their mind to whether the beneficiary partner is committing fraud, because they fear the answer or want to be able to deny it later then they could also be said to have reckless knowledge
• if a partner inquires and forms a belief that fraud is not being committed, they may be held liable for the fraudulent debt if a reasonable and honest person, in the same circumstances, would have appreciated the risk. This is because an appreciation of risk can be inferred. These cases often turn on the evidence.

If a partner does not make any inquiries, or turn their mind to whether their beneficiary partner is committing fraud, because they truly believe their partner is not committing fraud, then they are unlikely to be found to have reckless knowledge and cannot be prosecuted. This is because they genuinely and honestly believe it to be true (subjective knowledge).