Fairclough Homes Limited -v- Summers  [2012] UKSC 26

“Does a court, either pursuant to the Civil Procedure Rules or an inherent Jurisdiction, have the power to strike out an entire claim for damages, because the claim or the manner in which it is presented is substantially fraudulent?”

THE FACTS
Mr Summers was injured in an accident during the course of his employment with Fairclough Homes. The trial judge found for Mr Summers on liability. When it came to calculating quantum Mr Summers put his claim at more than £800,000, but undercover surveillance and extracts from his wife’s diary subsequently revealed that he had grossly exaggerated his injuries and levels of disability.  The damages awarded at trial amounted to just over £88,000.

THE LAW
The Supreme Court rejected an argument that the action should be struck out because of the Claimant’s behaviour. The court stated that Mr. Summers had suffered significant injury as a result of Fairclough Home’s breach of duty and it would be unjust and disproportionate to deprive him of his substantive right to bring a claim.  Although they confirmed that the courts do have the power under Rule 3.4 (2) to strike out, as an abuse of process the whole of a claim where a claimant has dishonestly exaggerated their claim.  This power can even be exercised after a trial has taken place.

However the Court then went on to qualify this, stating that it would be a very rare case where the exercise of the power would be appropriate; effectively ending any hope Defendants and their insurers may have had, of using this power as a tool in the fight against dishonest claims. 

PRACTICAL CONSEQUENCES
The reality for Defendants and insurers is that it is highly unlikely they will be able to use Rule 3.4 (2) to have an exaggerated claim struck out, even in the face of gross dishonesty.  It is wiser to rely on the dishonesty to attack the Claimant’s credibility in relation to bona fide elements of his claim. The exaggeration of a claim often makes it difficult to quantify, properly and precisely, the appropriate real value.  However prudent Defendants must still attempt to do so. The reality is that a court will award something.  The Defendant’s interests are often served by a prompt, and robust, early Part 36 offer. Thereafter the claimant is always at risk as to costs.

WHERE TO FIND THE CASE

Access the full Judgment at http://www.bailii.org/uk/cases/UKSC/2012/26.html