Insurers fail to overturn payout for man who made exagerrated claim

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Insurers have lost a Supreme Court appeal to overturn a damages payout to a man who fraudulently exaggerated his personal injuries claim.

Zurich argued that the entire claim for compensation made by Shaun Summers after an accident at work should be “struck out” because it was “substantially fraudulent”. Mr Summers, who worked as an assistant site supervisor for Fairclough Homes at the time of the 2003 accident, originally launched a case against his former employers for damages of £838,000.

But in April 2010 a judge at Manchester County Court assessed the sum to be paid at £88,716 for the genuine part of his claim – after undercover video surveillance evidence showed he was grossly exaggerating the effect of his injuries and his incapacity to work.

Fairclough Homes’ insurers Zurich argued that the courts should have the power to throw out an entire claim on the grounds that it was tainted by fraud and an abuse of process. Although five Supreme Court justices unanimously held yesterday that courts do have the power to strike out a claim “for abuse of process”, they declined to exercise it in Mr Summers’ case.

They said it was a power which should only be exercised in “very exceptional circumstances”.

Announcing the decision of the court, Lord Clarke said: “The court rejects the submission that unless exaggerated claims are struck out, dishonest claimants will not be deterred.

“There are many other ways in which deterrence can be achieved. These include ensuring that the dishonesty does not increase the award of damages.”

Mr Summers “accepts that in making statements of truth which he knew to be false and in presenting a dishonest case as to the effect of his injuries and on quantum, he was guilty of a serious abuse of process”, he said.

Lord Clarke added that nevertheless Mr Summers “did suffer significant injury” as a result of breach of duty by Fairclough Homes.