commercial litigation solicitors

Consequences of Making Exaggerated Claims

The Supreme Court has now handed down its judgment in the case of Fairclough Homes Limited (Appellant) v Summers (Respondent) [2012] UKSC 26 in which it has held that where a Claimant has dishonestly exaggerated his case, the claim should be struck out in its entirety as an abuse of process.

The background facts to the case are that Mr Summers was employed by Fairclough Homes Limited when he suffered an injury at work in 2003.  In 2006 Mr Summers issued a claim against Fairclough Homes Limited, alleging breach of duty and/or negligence.  In 2007 the Court found Fairclough Homes Limited liable for the injury sustained by Mr Summers.  The case then proceeded on the issue of damages.

Mr Summers initially claimed £838,616 in damages, which included a claim for loss of earnings up to October 2008.  Fairclough Homes Limited obtained surveillance evidence of Mr Summers between August 2007 and September 2008 which revealed Mr Summers had grossly exaggerated the extent of his injuries and his incapacity to work.  Mr Summers then reduced his claim to £250,000.

At the trial on damages in January 2010, Mr Summers was awarded the total of £88,716.76, significantly less than he had previously claimed.

Fairclough Homes Limited then went on to argue that the Claim should be struck out as it was clear Mr Summers had significantly over stated his claim.  This argument was taken to the Supreme Court which ruled that the Court does have the power to strike out a claim where the Claimant is deemed to have abused the court process.  Such an abuse does include deliberately making a false claim and/or presenting false evidence.  The Supreme Court was also very clear that it could take action even where the issue of liability had already been decided.

Despite this, the Supreme Court did not go so far as to strike out Mr Summer’s claim.

However, the Supreme Court went on to spell out that it would only exercise this power in very exceptional circumstances, and the Court must be satisfied that the abuse was such that the abuser had forfeited any rights to continue with the claim.  Unfortunately the Court did not go so far as to spell out what exactly those circumstances would be.  There are other mechanisms to ensure a Claimant does not profit from a fraudulent claim, such as ensuring the dishonesty does not increase the amount of damages awarded (as in the case of Mr Summers), making orders for costs, reducing interest and considering separate proceedings for contempt of court.

It is disappointing that the Supreme Court did not offer full guidance on this issue, but it is encouraging to know that the Court does have the power do to this.  Applications to strike out a claim on this basis will be considered on a case by case basis, and can extend beyond the sphere of personal injury claims.  It remains to be seen how this will be applied by the courts.

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