The claimant suffered broken bones in his hand and heel from an accident at work. The defendant employers, through their insurers, admitted liability. On 10 May 2006, the claimant commenced proceedings against the employers. He obtained a judgment dated 28 August 2007, with quantum to be assessed. The defendants were ordered to pay interim costs of £2000 and voluntarily made an interim payment of £10,000. The claimant served schedules of loss accompanied by statements of truth. The initial claim was £838,616, but when confronted with undercover surveillance evidence this was reduced to £251,481. By his judgment on 23 February 2010 the judge drew the inference of fraud against the claimant, based on his behaviour and the unreliability of his evidence, and awarded a total figure of £88,716.76. The defendants sought to have the entire claim struck out for fraud. The Supreme Court held as follows:

  1. It was rarely appropriate to strike out a claim after judgment under CPR 3.4(2). It was generally disproportionate to deprive a claimant of a substantive right which he had established after a fair trial.
  2. A party who fraudulently or dishonestly invented or exaggerated a claim would have considerable difficulties in persuading the trial judge that any of his evidence should be accepted, thereby reducing his chances of establishing both liability and quantum.
  3. A fraudulent claimant should be ordered to pay the costs of any part of the process which had been caused by his fraud or dishonesty, and on an indemnity basis. Such costs might even leave the claimant out of pocket.
  4. It would not help the defendant to make a Part 36 offer representing the genuine loss, because such an offer requires the defendant to pay the fraudulent claimant’s costs. However, it remained possible for a defendant to make a Calderbank offer under which there was an offer to settle the genuine claim but on the basis that the claimant will pay the defendant’s costs incurred in respect of the fraud on an indemnity basis.
  5. The court could also reduce interest that might otherwise have been awarded to a claimant where time had been wasted on fraudulent claims.
  6. Contempt could be an effective sanction. Those caught should expect to go to prison. There was no reason why contempt proceedings should not be a part of the substantive proceedings themselves, because the trial judge would be best placed to hear both.
  7. There was also a possibility of criminal proceedings, in that the judge could refer the matter to the Criminal Prosecution Service or the Director of Public Prosecutions.

On the facts of the present case a striking out would not be ordered, instead, judgment would be given for the claimant, because he had suffered serious injury. The effect of the costs and interests awards, plus the deduction of the £10,000 previously received, would be that the claimant would see very little of the award of £88,716.76. That aside, the Supreme Court thought that this was a case in which, had permission for contempt proceedings been granted, such proceedings would have had every prospect of success.

For further information: Fairclough Homes Ltd v Summers [2012] UKSC 26