The UK Supreme Court whilst holding that it has the jurisdiction to strike out a claim for abuse of process has declined to do so in an injury action where the claimant accepted that he had made statements of truth which he knew to be false and where the trial Judge had held that the evidence was sufficiently quoted to sustain a claim of fraud not only applying to civil standard but also the criminal standard.

The case of Fairclough Holmes Limited (Appellant) v Summers (Respondent) concerns an accident at work. The claimant suffered a fracture to his right scaphoid and a complicated ankle fracture.

In August 2007 the County Court gave Judgment for the claimant on liability with damages to be assessed at a later date. Between October 2007 and September 2008 the Defendant Appellant subjected the Claimant to covert surveillance which revealed that the Claimant was grossly exaggerating the effect of his injuries and incapacity to work.

The insurers did not show their hand at that stage and by December 2008 the Claimant served a Schedule of Loss claiming damages of £838,616.00 including a claim for loss of earnings up to October 2008. Having received that claim, the Defendant Appellant disclosed its surveillance evidence to the Claimant’s representatives and amended its Defence asserting that the claim was dishonestly exaggerated and should be struck out in its entirety. The Claimant subsequently served two further Schedules of Loss valuing the claim at a greatly reduced figure of approximately £250,000.00. All the Schedules of Loss were supported by “Statements of Truth”.

The trial on damages took place in January 2010.

The Claimant did not challenge the surveillance evidence. The Judge held that there was no doubt that he had suffered serious fractures. The ankle injury had required two arthrodesis procedures. The Judge found that the evidence established that the Claimant committed fraud and had deliberately lied to medical experts and the Department of Work & Pensions. The Judge having considered the evidence found that the Plaintiff would have been fit for work since the end of June 2007. The Judge awarded the Plaintiff damages in respect of loss of earnings up to that point in accordance with his findings. The total award to include general damages of £18,500.00 was £88,716.76.

The Defendant Appellant submitted that the Court had power to strike out the claim in its entirety on the grounds that it was tainted by fraud and was an abuse of process.

The Judge at first instance and the Court of Appeal held that they were bound be decisions of the Court of Appeal in Ul-Haq v Shah [2009] EWC CIV 542 and Widlake v BAA [2009] EWC CIV 1256 to refuse the Application on the ground that the Court had no power to strike out a statement of case in such circumstances.

The Supreme Court which unanimously held that the Court does have jurisdiction to strike out the claim for an abuse of process but in this instance chose to decline to exercise its power.

The Judgement was given by Lord Clarke. The Court considered in detail the provisions of the Civil Procedure Rules and the inherent jurisdiction of the Court which existed prior to those Rules coming into operation.

Having found that the Court did have the power to strike out a statement of case it did go on to rule that it should only exercise the power in very exceptional circumstances.

“The power to strike out a claim at the end of a trial should only be exercised if the court is satisfied that the party’s abuse of process was such that he had thereby forfeited the right to have the claim determined. This is a largely theoretical possibility. It must be a very rare case in which, at the end of a trial, it would be appropriate for the Judge to strike out a case rather than dismiss it in a Judgement in the merits in the usual way. The same is true where, as in this case, the court is able to assess both the liability of the Defendant and the amount of that liability.”

Moreover the Court considered that the conclusion was compatible with Article 6 of the European Convention on Human Rights stating that “it will only strike out the claim if this is a proportionate means of achieving the aim of controlling the process of the court when dealing with the cases justly. It is very difficult to think of circumstances in which such a measure would be proportionate. However they might include a case where there had been a massive attempt to deceive the Court but the award of damages would be very small”.

The Court rejected the submission on behalf of the Defendant insurers that unless exaggerated claims are struck out dishonest Claimants will be not be deterred. The Court insisted that there are many other ways in which deterrents can be achieved including making Orders for costs, reducing interest, proceedings for contempt in criminal proceedings and in appropriate cases where adverse inferences can also be drawn against the Claimant.

Ultimately the Court found that although the Claimant Respondent accepted making Statements of Truth which he knew to be false, as a matter of substantive law the Court found he did suffer significant injury as a result of the Defendant’s breach of duty and that it would not be proportionate or just to strike the claim out. The Supreme Court dismissed the Defendant Appellant’s Application.

The Judgement in full is here http://www.supremecourt.gov.uk/docs/UKSC_2010_0212_Judgment.pdf

The Press Summary is here http://www.supremecourt.gov.uk/docs/UKSC_2010_0212_ps.pdf

The Judgement has typically been widely acclaimed by Claimant Lawyers. It is clearly a blow to Insurers who rightly have invested huge sums of money to combat fraud.

Next up for this blog is an analysis of this decision and the potential for a challenge to Section 26 of The Civil Liability and Courts Act 2004, in Ireland.