Fairclough Homes Ltd v Summers [2012] UKSC 26

Trainee Solicitor Alec Alston explores the implications of the Supreme Court decision in Fairclough Homes Ltd v Summers [2012] UKSC 26

Judgment was handed down on 27 June 2012 in the Supreme Court, in what could be determined as a landmark decision for the insurance industry.

In Fairclough Homes Ltd v Summers [2012] UKSC 26 the Claimant suffered serious hand and leg fractures in an accident at work, in May 2003. In August 2007, Manchester County Court entered judgment for the Claimant on liability with damages to be assessed.

The insurer decided to take their fight to refuse payment on their genuine element of fraudulent third party claim to the Supreme Court, after undercover surveillance evidence was obtained by solicitors for the Defendant, showing that the Claimant had greatly exaggerated his claim.

At first instance, the court found that Mr Summers had committed fraud to satisfy the criminal standard and even went as far as having an unnecessary surgical procedure, in a futile attempt to prove the extent of his exaggerated injury.

Solicitors for the Defendant sought leave to appeal to the Court of Appeal, on the basis that the claim should be struck out in its entirety, as an abuse of process under CPR 3.4(2). Ward LJ found that the Claimant was, “an out and out liar who fraudulently exaggerated his claim” but dismissed the appeal because his hands were tied behind the decisions of Ul Haq v Shah [2009] and Widlake v BAA [2009].

On appeal to the Supreme Court, it was accepted, in the leading judgment of Lord Clark, that the Court does have the power to strike out any claim for inherent abuse of process at any stage, even after trial. Despite this, the Court ruled that its application was not appropriate in the present case.

This decision is a bold move for the Court to take; especially in the field of fraud, or where a fraudulent element can be pleaded in a particular case, as it confirms that the Court now has the jurisdiction to strike out the claim.

The problem lies with the interpretation of this ruling because the Supreme Court offered no guidance where it would be considered “just and proportionate” to strike out a fraudulent claim under CPR 3.4(2). The only offering tendered by Clark LJ was that the Court should reserve this power for “very exceptional circumstances” and the only case where a court should take such a draconian step was where there had been a “massive attempt to deceive” with a “very small award” for damages.

The extent of this ruling will help to act as a deterrent to those who abuse the process of the Court, however much will depend on the construction of the proviso: “very exceptional circumstances” and many commentators believe that this could lead to years of satellite litigation.

The case has been perceived to be a disappointment to the insurance industry, which had hoped for judicial approval of the principle to help fight fraudulent and exaggerated claims. However, the decision does confirm that judges do have the power to strike out a case where the dishonesty/ fraud taints the whole claim.

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