Summers v Fairclough Homes Limited

In a landmark judgment given on 27 June 2012 the Supreme Court in the case of Summers v Fairclough Limited, in which William Norris QC led James Todd and Sadie Crapper, declared that the court has the power under the CPR and the inherent jurisdiction to strike out a case for abuse of process at any stage of the proceedings including at the end of trial, even when it had already been determined that the claimant was, in principle, entitled to damages in an ascertained sum, and that deliberately to make a false claim and to adduce false evidence is an abuse of process.  However, the power to strike out is to be exercised only where it was just and proportionate to do so, and that was likely to be only in very exceptional circumstances when such application is made at the end of trial.

Shaun Summers suffered a fracture to his ankle in an accident on a building site. Once recovered, he embarked on a wholesale and fraudulent scheme to exaggerate his claim for damages. He maintained, for example, that he was dependent on crutches and incapable of working, when copious surveillance conducted both by the defendant's insurer, Zurich Insurance, and by the DWP demonstrated that he was independently mobile and working in a burger van. Remarkably, he even deluded his treating doctors to the extent that he underwent an operation which, the trial judge found, would not have been deemed necessary had he been honest about the true extent of his recovery. Selecting the case as one in which to press forward an attack in insurers' ongoing war against fraudulent claims, the defendant argued that the court should use its power to strike out this substantially dishonest claim in its entirety as an abuse of process. The Court of Appeal, standing by its earlier decision in Shah v Ul-Haq [2010] 1 W.L.R. 616, upheld the judge's award of damages for the genuine part of the claim, and said that it is the policy of the law and the invariable rule that a person cannot be deprived on the ground of abuse of process of a judgment for damages to which he is otherwise entitled. In so holding, it also found that the power to strike out a claim under CPR 3.4 could only be exercised 'summarily' in the sense of 'before trial' and not therefore at the end of trial, as contended by the defendant.  In the Supreme Court, the defendant succeeded in overturning the Court of Appeal on both of these points, although the Court declined to exercise the power to strike out Summers' claim in its entirety. The Supreme Court held that

deliberately to make a false claim and to adduce false evidence is an abuse of process the power to strike out such a case (under CPR 3.4(2)(b) or the inherent jurisdiction) is available at any time in proceedings, including at the end of trial the circumstances in which the court might strike out a claim on the ground of abuse of process at the end of a trial are however very exceptional, and the power will only be exercised where it would be just and proportionate to do so if after a trial, notwithstanding the claimant's dishonesty, the court is able to assess both the liability of the defendant and the amount of that liability, it should normally do so.

The Supreme Court also provided valuable commentary and guidance on the approach to be taken in dealing with cases of fraudulent exaggeration, including the drawing of appropriate inferences against the fraudster claimant at trial, imposing penalties in costs, reducing interest on the honest part of the claim and pursuing the claimant for contempt and/or under the criminal law.  Importantly, the Court acknowledged that Part 36 is of no real assistance in dealing with claims tainted by fraudulent exaggeration and encouraged the use of Calderbank offers to settle the genuine part of the claim, but at the same time offering "to settle the issue of costs on the basis that the claimant will pay the defendant's costs incurred in respect of the fraudulent or dishonest aspects of the case on an indemnity basis."

It remains to be seen whether Parliament will now decide to encourage or direct the courts to exercise the power that has been finally acknowledged. That will depend on whether others take a different view from the Supreme Court as to the utility of existing sanctions in deterring prospective cheats and of the potential deterrent value of the strike out sanction contended for in the instant case. It will also depend on the public importance attached to such deterrence. If Parliament were to act in that way, it would be following the example of the Irish Parliament which introduced just such a draconian power in legislation in 2004.