06 October, 2015
The Court has given leave for the case of Hayward v Zurich Insurance Company PLC to be appealed to the Supreme Court. Earlier this year, the Court of Appeal considered whether a claim settled by Tomlin order could be re-opened on the basis of fraud.
The Claimant had brought an employers' liability claim, liability was admitted but quantum was disputed on the basis that the Claimant was exaggerating his injuries. The claim was settled prior to the quantum trial in the sum of £134,973.11. A couple of years later Mr Hayward's neighbours, approached the employers to say that they believed that the Claimant's claim had been dishonest. From their observation of his conduct and activities, they believed that he had entirely recovered from his injury at least a year before the settlement. Zurich attempted to set aside the settlement and reclaim the money they had paid by way of damages.
The Court of Appeal dismissed the claim, Lord Justice Underhill ruled that "parties who settle claims with their eyes wide open should not be entitled to revive them only because better evidence comes along later". According to the Court, Zurich had suspected the claim was fraudulent from the outset and therefore as they had agreed to settle the claim despite holding such suspicions they could not subsequently seek to rescind the contract simply because better evidence came along.
We await the Supreme Court's decision on this case, as clearly this case raises important public policy decisions regarding re-opening settled claims. As things stand, it will be difficult for insurers to reopen settled cases unless there was no knowledge of fraud at the time of settlement.
For further information, please contact Sarah Wilkinson