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Fraudsters beware! - Fairclough Homes (Appellant) v Summers (Respondent) [2012] UKSC 26

The Supreme Court has taken a step forward in addressing exaggerated and fraudulent personal injury claims.

It found a court has power under CPR 3.4(2) and under its inherent jurisdiction to strike out an exaggerated or fraudulent statement of case at any stage of proceedings as an abuse of process. This power exists even when it is already determined that a claimant is entitled to damages in an ascertained sum. The Respondent ("S") was injured in an accident at work. A claim was issued and the Appellant ("FH") admitted liability.

Undercover surveillance by FH showed S was grossly exaggerating the effect of his injuries. When FH disclosed the surveillance evidence S reduced his schedule of loss from £838,616 including loss of earnings to £250,000. All schedules were signed by a statement of truth.

The Judge found that although S had suffered two fractures he had fraudulently misstated the extent of his injuries; and his fitness to work. Accordingly, given his behaviour and the unreliability of his evidence, the Judge awarded S a significantly reduced sum.

FH appealed, submitting that the court had power to strike out the claim since it was tainted by fraud and was an abuse of process. In refusing the application the CA ruled that a person cannot be deprived of a judgment to which he is otherwise entitled on the ground of an abuse of process (Ul-Haq v Shah [2009] EWCA Civ 542 and Widlake v BAA [2009] EWCA Civ 1256 followed).

The Supreme Court disagreed. The express words of CPR 3.4(2)(b) gave the Court power to strike out a claim as an abuse of process. Deliberately making a false claim would be such an example.

Yet the insurance industry should contain its excitement. Each case must be scrupulously examined in line with the ECHR. A claim can only be struck out if it is a proportionate means of achieving the aim of controlling the process of the Court and dealing with cases justly.

The appeal was ultimately dismissed as S had suffered significant injury due to FH’s negligence. It would not be just or proportionate to strike out the claim given that S’s fraud and dishonesty led the Judge at first instance to reject much of his evidence, and award a lesser sum for damages.

Vaughan Jacob / 1st Jul 2012


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