Fairclough Homes Ltd v Summers, United Kingdom Supreme Court, Judgment, Law, casemine.com

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Fairclough Homes Ltd v. Summers

Smart Summary

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injured in a workplace accident on 13 May 2003, sued his employer, Company A. Liability was admitted but later withdrawn, leading to a contested trial on liability in 2007, at which the Respondent succeeded, damages to be assessed.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.