At the end of July, the Supreme Court allowed Zurich Insurance Company plc to set aside a settlement when it was later discovered that the Claimant had been fraudulent.

The question for the Court was whether the insurance company should be allowed to set aside a settlement when they settled the original claim knowing that there was a suspicion of fraud.

The original claim came about when Mr Hayward injured his back at work in 1998 and then started a personal injury claim against his employers.

There was concern in the original action that Mr Hayward had exaggerated his injury. The insurance company went as far as getting video surveillance which did suggest that there was a fraudulent element to the claim, but they nevertheless settled in 2003 just before trial.

It was only two years later that the Claimant's neighbour contacted Mr Hayward's employers, the Defendants, to allege that the back injury was dishonest.

When Zurich attempted to reopen the case, Mr Hayward's lawyers argued that parties who settle claims with their eyes wide opened should not be entitled to revive them only because better evidence comes along later. The Supreme Court, however, took a dim view and they decided that Mr Hayward's deceitful conduct was intended to cause the insurers to value his claim more highly than it was worth if the true facts had been disclosed. His dishonest conduct persuaded the insurance company to pay almost ten times more than the claim was truly worth. The Supreme Court therefore, upheld the first instance decision and the Claimant was awarded damages of £14,720.00 and was ordered to repay the original settlement sum back to Zurich.

The insurer's lawyers welcomed the decision and noted that insurance companies will now be free to revisit settlements made before hard evidence of fraud comes to light and will be able to pursue those who thought they had got away with it.