In Hayward v Zurich Insurance Company plc  UKSC 48 the Supreme Court of the United Kingdom considered whether a settlement agreement could be set aside in circumstances where proof (or, rather, further proof) of a dishonest claimant’s fraud was subsequently established.
At the time of settling an insurance claim in 2003, the insurer knew the claimant was exaggerating his injuries the subject of the claim. However, in 2009, evidence surfaced which proved the exaggeration was to a greater extent than initially known, and the insurer sought to set aside the previous agreement.
The Court unanimously held the insurer did not have to prove it was induced into the settlement because of a belief the misrepresentations were true; rather, it simply needed to demonstrate the misrepresentations caused it to act to its detriment. The insurer proved that in this case, such that the settlement agreement was set aside and a reduced sum was awarded to the claimant in respect of his legitimate injuries.
This judgment stands as yet another authority for the proposition that fraud unravels all – and, to borrow the words of Lord Denning, ‘vitiates judgments, contracts and all transactions whatsoever‘.