Supreme Court rules on strike out for dishonest claimants

Supreme Court rules on strike out for dishonest claimants

Published:

Author: Paul Eccles

 

The Supreme Court of the United Kingdom has today (27 June) handed down judgment in the case of Fairclough Homes Limited (Appellant) v Summers (Respondent).

Judgment deals with two central issues:

  • where a defendant was still held liable for damages even though the claimant submitted an exaggerated/dishonest claim whether the court still had the power to strike-out the whole claim on the basis that it was an abuse of process i.e. tainted by dishonesty
  • when that power should be exercised

The Supreme Court unanimously held that while the Courts did have jurisdiction to strike-out a claim for abuse of process, it declined to exercise the power in the circumstances of this case.

Facts


The claimant initially brought a case against his former employer alleging breach of duty and/or negligence.

The respondent succeeded on liability at first instance in the county court with damages to be assessed at a later date.

As a result of surveillance evidence, the appellants were able to argue that the respondent was 'grossly exaggerating' his injuries and ability to work. The appellants asserted in their defence that the claim was dishonestly exaggerated and should be struck-out. The respondent did not challenge the surveillance evidence. All the respondent's pleadings were supported by Statements of Truth.

Trial


The trial judge held that the respondent had suffered serious fractures, requiring at least 2 operations. However, the trial judge also found beyond reasonable doubt that the respondent had fraudulently misstated the extent of his injury, and had deliberately lied to medical experts and to the DWP.

A greatly reduced award was made; The Respondent received some £88,000 out of the original £850,000 originally claimed.

The Court of Appeal


The Appellants argued that the court had power to strike-out a claim in its entirety where dishonesty or fraud was present, amounting to abuse of process. The Court of Appeal rejected that argument, considering itself bound by earlier decisions.

Supreme Court decision


The Supreme Court did find that courts had the power, within the CPR, to strike-out a claim for abuse of process, but that this should only be exercised in exceptional circumstances.

Only where a court was satisfied that the parties' 'abuse' was such to amount to a forfeiture of the right to have the claim determined, would this be appropriate.

A Supreme Court press release issued today noted:

"The Court rejects the submission that unless exaggerated claims are struck out, dishonest claimants will not be deterred. There are many other ways in which deterrence can be achieved. These include ensuring that the dishonesty does not increase the award of damages, making orders for costs (including indemnity costs), reducing interest, proceedings for contempt and criminal proceedings. In appropriate cases adverse inferences can also be drawn against the claimant."

In essence, although the respondent knew he was bringing a false claim in part and therefore guilty of a serious abuse of process, he still suffered a significant injury as a result of the appellant's breach of duty of care.

The Supreme Court held, therefore, that in the circumstances of this particular case 'it would not be proportionate or just to strike the claim out'.

So it appears that much of what was in place prior to the handing down of this judgment remains in place, and a number of arguments and remedies are clearly open to defendants and their insurers to challenge dishonest claims.

Equally, however, it seems the law remains reluctant to strike-out a case in its entirety where some genuine measure of loss has been suffered although the Court did say that such a measure might be proportionate where "there had been a massive attempt to deceive the Court but the award of damages would be very small."

See full Supreme Court press summary at: http://www.supremecourt.gov.uk/docs/UKSC_2010_0212_ps.pdf