After a few helpful recent cases for Claimant’s on the issue of "fundamental dishonesty” the Supreme Court recently gave its decision in the case of Hayward v Zurich Insurance plc [2016] UKSC 48.

The Claimant had suffered injury during the course of his employment and took the opportunity to grossly overstate the extent of his disability, claiming more than £400,000 from his employer’s insurers.

Zurich, having admitted primary liability for the accident, suspected that the Claimant might be trying to pull a fast one and did plead that to be the case in terms of the extent of injury and subsequent loss. However, the insurer chose to settle the claim for a fraction short of £135,000 even though they had surveillance evidence at that time.

That was not the end of the case as we know.

The insurer was made aware that the Claimant had been lying all along and had fully recovered from his injuries a year before settlement was agreed. As such they sought to undo the settlement on the basis of fraud and have the award repaid to them. At trial, the Judge decided that the settlement should be set aside and repaid, awarding Mr Hayward £14,720.  However, the Court of Appeal overturned that decision and held that, given Zurich was aware of the fraud at the time of settlement; it could not be set aside once proof of the fraud was obtained.

Zurich appealed to the Supreme Court and in a landmark judgment for Defendants, the Supreme Court unanimously decided that where an insurer suspects fraud but has still chosen to settle a claim, they would be entitled to set aside the settlement under the tort of deceit, if they subsequently obtained proof that it was in fact fraudulent.

This follows hot on the heels of the decision in Versloot Dredging BV & Anor v HDI Gerling Industrie Versicherung AG & Ors [2016] UKSC 45 of the ability to decline payment on the basis of collateral lies told by the assured, although the lie in the Versloot Dredging case didn't affect the value of the claim, so one not to be confused with Hayward.

Yes this case opens for the door for Defendant’s to revisit old settled cases that they may have had strong suspicions about. But could that door not open both ways, where Claimants have had strong suspicions that Defendants have acted fraudulently? The difficulty there of course is that one camp has much deeper pockets and can afford to take the point further, the other most probably can’t.