The Supreme Court has handed down its Judgment in the long running employer’s liability case between Shaun Summers and his former employer, Fairclough Homes. The case reached the Supreme Court on the question of whether Mr Summer’s genuine personal injury claim could be struck out as having been “tainted by fraud and abuse of process”. In short, could a claimant lose the right to a genuine claim through having fraudulently exaggerated the extent of it?

The Supreme Court has decided that this is theoretically possible, but only in limited and exceptional circumstances. Unfortunately for Fairclough, this case did not constitute such circumstances.
Background

The facts will be familiar to many practitioners. Summers sustained a genuine injury in the course of his employment with Fairclough in May 2003. At trial, in August 2007, judgment was given for Summers on liability, with damages to be assessed.

But Fairclough’s insurer was suspicious of Summers’ injuries and placed him under surveillance. Footage showed that Summers had seriously exaggerated the extent of his injury. Having seen the video evidence Summers revised his valuation of the claim and made attempts to compromise the case through Part 36 offers and proffering a joint settlement meeting. However Fairclough declined all such offers. Summers was effectively forced to trial with Fairclough hoping to persuade the court to strike out the claim in its entirety even though only part of it was fraudulent and an abuse of process. For this to be successful the Court of Appeal’s decisions in Ul-Haq -v- Shah and Widlake -v- BAA would have to be overturned.

Decision

The Supreme Court could not be persuaded to strike out Summers’ claim in its entirety. It has though reversed the Court of Appeal’s position making it clear that a court does have the power to strike out a statement of case for abuse of process even after trial and where it has been able to make a proper assessment of both liability and quantum. However the circumstances in which a court should exercise this jurisdiction will be exceptional. It should only do so when it is a proportionate way of dealing with a case justly.

In deciding that this was not such a case the Supreme Court noted there were other avenues which the defendant could have explored on appeal, namely the decisions at first instance on interest and costs and the refusal to give permission for contempt of court proceedings. The Supreme Court indicated that it would have looked favourably on any appeal on the contempt point.

Comment

Whilst it is encouraging to know that the court has the power to strike out the entire claim in appropriate circumstances, it appears there is a reluctance to deny the claimant damages for legitimate injuries and losses. It appears the court may only exercise this draconian power in cases which are entirely fraudulent and where the claimant has no entitlement to damages whatsoever. It remains to be seen how or even if the lower courts will be brave enough to exercise the jurisdiction in this way.

The message to defendants seems to be:

• Take all reasonable steps to deal with the genuine elements of a claim
• Seek appropriate orders in respect of costs and contempt proceedings.

Source – Hill Dickinson Insights – 28 June 2012