- Bookmark
- Share
- CaseIQ
Fairclough Homes Ltd v Summers
Factual and Procedural Background
The Respondent, injured in a workplace accident on 13 May 2003, sued his employer, Company A. Liability was admitted but later withdrawn, leading to a contested trial on liability in 2007, at which the Respondent succeeded, damages to be assessed. Subsequent video surveillance revealed serious exaggeration of continuing disability. Despite this, the quantum trial proceeded in January 2010, resulting in an award of £88,716.76 (before statutory deductions and an interim payment). Company A then sought to have the entire claim struck out as an abuse of process because of the Respondent’s fraud. The trial judge refused, awarded damages, imposed adverse costs on Company A for refusing to negotiate, and denied permission for contempt proceedings. Company A appealed unsuccessfully to the Court of Appeal and then to the Supreme Court.
Legal Issues Presented
- Does a civil court possess power under CPR 3.4(2) or the inherent jurisdiction to strike out a statement of case for abuse of process after liability and quantum have been determined?
- If such power exists, in what circumstances is it just and proportionate to exercise it?
- Should the power be exercised on the specific facts of this case, where fraud was proved but an assessment of damages was possible?
Arguments of the Parties
Appellant's Arguments
- The court retains power under CPR 3.4(2)(b) and its inherent jurisdiction to strike out a claim at any stage, including post-trial, where fraud constitutes an abuse of process.
- Fraudulent personal-injury claims are widespread; striking them out entirely is necessary as a deterrent.
- Earlier Court of Appeal authority (particularly Ul-Haq v Shah and Widlake v BAA) was wrongly decided and should be departed from.
Respondent's Arguments
- While fraud occurred, the court lacks power (or should decline to exercise any such power) to extinguish a substantive, adjudicated right to damages.
- Any sanction must be proportionate; costs, interest, or contempt proceedings suffice without striking out the whole claim.
- The Court of Appeal decisions in Ul-Haq v Shah and Widlake v BAA remain binding precedent.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ul-Haq v Shah [2009] EWCA Civ 542; [2010] 1 WLR 616 | CA view that courts cannot strike out genuine damages after trial for fraud | Supreme Court disagreed on jurisdiction but accepted strike-out should be “very exceptional” |
| Widlake v BAA Ltd [2009] EWCA Civ 1256 | Same principle as Ul-Haq on post-trial strike-out | Distinguished; not followed on jurisdiction |
| Birkett v James [1978] AC 297 | Inherent jurisdiction to strike out for intentional/contumelious default | Used to illustrate historic availability of drastic sanctions |
| Arrow Nominees Inc v Blackledge [2000] 2 BCLC 167 | Striking out where misconduct prevents a fair trial | Distinguished; fairness of trial not jeopardised here |
| Masood v Zahoor [2009] EWCA Civ 650; [2010] 1 WLR 746 | Strike-out at end of trial possible only in “very rare” cases | Approach approved and adopted |
| Manifest Shipping v Uni-Polaris [2003] 1 AC 469 | Fraudulent claim rule in insurance law | Held inapplicable to litigation outside insurance context |
| Agapitos v Agnew [2003] QB 556 | Limits of fraudulent insurance claims doctrine | Cited to confirm rule’s confined scope |
| Axa General v Gottlieb [2005] 1 All ER (Comm) 445 | Fraudulent insurance claims pre-issue | Same as above |
| Biguzzi v Rank Leisure plc [1999] 1 WLR 1926 | Flexible case-management discretion under CPR | Supports availability of tailored sanctions |
| Hunter v Chief Constable of West Midlands Police [1982] AC 529 | Inherent power to prevent abuse of process | Relied on to justify existence of strike-out jurisdiction |
| National Westminster Bank plc v Rabobank Nederland [2006] EWHC 2959 (Comm) | Strike-out post-trial only in rare cases | Cited in support of exceptional threshold |
| Glasgow Navigation Co v Iron Ore Co [1910] AC 293 | Historic recognition of post-trial strike-out power | Illustrative authority |
| Webster v Bakewell RDC (1916) 115 LT 678 | Historic abuse-of-process control | Cited for completeness |
| Harrow LBC v Johnstone [1997] 1 WLR 459 | Late-stage strike-out jurisdiction | Part of historic line of cases |
| Bentley v Jones Harris & Co [2001] EWCA Civ 1724 | Power to strike out for abuse post-trial | Supportive authority |
| The Royal Brompton Hospital v Hammond [2001] EWCA Civ 550; [2001] Lloyd’s Rep PN 526 | Confirmation of inherent abuse jurisdiction | Cited approvingly |
| Asiansky Television v Bayer-Rosin [2001] EWCA Civ 1792; [2002] CPLR 111 | Flexibility under CPR | Supports proportional sanctions |
| Aktas v Adepta [2010] EWCA Civ 1170; [2011] QB 894 | “Sanction must fit the breach” | Quoted for proportionality principle |
| Fox v Foundation Piling Ltd [2011] EWCA Civ 790 | Permissibility of Calderbank offers outside Part 36 | Basis for suggested cost-protection mechanism |
| Calderbank v Calderbank [1976] Fam 93 | Without-prejudice offers affecting costs | Cited for alternative to Part 36 offers |
| South Wales Fire & Rescue Service v Smith [2011] EWHC 1749 (Admin) | Imprisonment for contempt based on false claims | Illustrates deterrent sanctions short of strike-out |
| Nield v Loveday [2011] EWHC 2324 (Admin) | Similar contempt sentencing | Same purpose |
| Lane v Shah [2011] EWHC 2962 (Admin) | Further contempt authority | Same purpose |
| Ali v Esure Services Ltd [2011] EWCA Civ 1582 | Practicality of contempt in insurance fraud | Cited to dispel procedural concerns |
| Wilkinson v S [2003] EWCA Civ 95; [2003] 1 WLR 1254 | Bias principles if trial judge hears contempt | Clarified procedural safeguards |
| Golder v United Kingdom (1975) 1 EHRR 524 | Article 6 ECHR – right of access to court | Court ensured strike-out power compatible with Convention |
| Ashingdane v United Kingdom (1985) 7 EHRR 528 | Limitations on access must be proportionate | Applied in proportionality analysis |
| Pressos Compania Naviera SA v Belgium (1996) 21 EHRR 301 | Article 1 Protocol 1 – deprivation of possessions | Referenced in considering damages as “possessions” |
| Johnson v Gore Wood & Co [2002] 2 AC 1 | Warning against limiting abuse categories | Used to justify open-textured approach |
| Arbuthnot Latham Bank Ltd v Trafalgar Holdings Ltd [1998] 1 WLR 1426 | Strike-out for intentional default pre-CPR | Historical context |
Court's Reasoning and Analysis
The Supreme Court held that CPR 3.4(2)(b) expressly empowers a court to strike out a statement of case for abuse of process and that the rule codifies, but does not displace, the court’s inherent jurisdiction. Historical authorities demonstrate that striking out after trial is possible, though extremely rare. The Court rejected the absolute bar suggested in Ul-Haq v Shah, emphasising that the overriding objective and proportionality govern the exercise of any strike-out power.
Article 6 and Article 1 Protocol 1 ECHR considerations require any deprivation of an adjudicated damages award to pursue a legitimate aim and be proportionate. Striking out will therefore be justified only in “very exceptional circumstances,” such as a massive and wholly fraudulent claim yielding only nominal genuine loss.
The Court identified alternative, proportionate sanctions capable of deterring fraud without extinguishing a valid claim: (i) refusing to allow dishonesty to inflate damages; (ii) indemnity cost orders; (iii) reduced or nil interest; (iv) contempt proceedings, often leading to imprisonment; and (v) potential criminal prosecution. The Court endorsed the use of Calderbank offers to protect a defendant’s costs position where Part 36 is unsatisfactory.
Applying these principles, the Court concluded that, although the Respondent’s abuse was serious, the trial judge had fairly assessed both liability and quantum, imposed suitable cost penalties, and considered contempt. Striking out the entire claim would be disproportionate.
Holding and Implications
APPEAL DISMISSED.
The Supreme Court affirmed that a post-trial strike-out jurisdiction exists but should be exercised only in very rare and exceptional cases where it is the only just and proportionate response. In routine fraud or exaggeration cases, courts should instead rely on adverse findings, cost penalties, interest adjustments, and possible contempt or criminal proceedings. The decision clarifies the balance between protecting the integrity of the courts and preserving adjudicated substantive rights, providing guidance for future personal-injury fraud litigation without establishing a new test case strike-out precedent.
Alert