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    UK: Supreme Court Preserves Courts’ Jurisdiction to Strike Out Exaggerated Claims During Trial

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    On 27 June the Supreme Court handed down its judgment in the case of Summers v Fairclough Homes Limited [2012] UKSC 26, which gives helpful guidance on the exercise of courts’ jurisdiction to strike out statements of case.

    Summers suffered an injury at work, for which Fairclough, his employer, admitted liability through its insurers. Summers issued proceedings and calculated his loss on the basis that his injury left him unable to stand for more than 10 to 15 minutes, and he therefore stood a reduced chance of gaining future employment. In the years between the commencement of proceedings and the start of the trial, Fairclough subjected Summers to undercover surveillance and established that Summers had grossly exaggerated the extent of his injury. Fairclough particularised Summers’ dishonesty in its defence, but Summers maintained his original position and the matter proceeded to trial.

    In the High Court, Fairclough argued that Summers’ fraud justified the court exercising its jurisdiction under Rule 3.4(2) of the Civil Procedure Rules (CPR), to strike out Summers’ statement of case on the basis of an abuse of process. The judge took the view that Summers’ exaggeration merely rendered fraudulent a determinable proportion of the claim, which could be excluded. The judge ordered Fairclough to pay the proportion of the claim to which the claimant was legitimately entitled.

    The issue on appeal to the Supreme Court was whether, as Fairclough argued, an appeal court has the power to strike out a claimant’s statement of case as an abuse of process following a trial at which the court determines that the defendant is liable in damages.

    The Court’s conclusion was that there is no provision in the CPR or anywhere else which restricts the court’s jurisdiction under Rule 3.4(2) to a particular stage in the proceedings. The courts have the power to make such an order at any time, even where it would defeat a substantive claim which was otherwise made out.

    However, the Court somewhat diminished the force of this conclusion by asserting that, in practice, a court should not strike out a statement of case at the end of a trial except in very exceptional circumstances. A claimant must have forfeited his right to have his claim determined and, as such, the test of proportionality under the Human Rights Act must be applied. Where a claimant has, at least in part, a legitimate claim in damages, the extent of the fraud must be very great to render the court’s striking out of the whole claim a proportionate step. Lord Clarke, who delivered the judgment of the Supreme Court, did not provide an example of where such a step would be proportionate, but justified the preservation of the theoretical power on the basis that “one should never say never”. It was determined on the present facts that Summers’ legitimate entitlement to almost £90,000 in damages outweighed an argument supporting the proportionality of an order to strike out the claim under Rule 3.4(2).

    Fairclough’s insurer pursued this action as a test case with the objective of securing a precedent which would deter future claimants from exaggerating claims. The judgment has not provided clarity on the issue, as the courts are clearly of the view that in most circumstances justice can be done by means of adverse inferences, penalties in costs, reductions of interest and further proceedings for contempt. It is apparent, however, that applications to strike out exaggerated statements of case stand a higher chance of success the earlier they are made, since the prospect of saving costs and court resources will be a persuasive factor in the issue of proportionality.

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