Zurich fraud decision gives fresh hope to insurers
31 May 2011
The insurance industry’s campaign against fraud received a shot
in the arm after the Court of Appeal allowed Zurich Insurance to
pursue a claim for fraudulent representation.
According to Steven Conway, a partner at law firm Browne
Jacobson the decision in Zurich Insurance Co PLC v Colin Hayward
brings much needed clarity to when an insurance company can pursue
an action in the courts once it discovers that an earlier
settlement it had agreed to was subject to false
representations.
The defendant, Colin Hayward, had been injured in an accident at
work in 1998. He claimed damages amounted to just under £420,000
which included a claim for loss of earnings on the basis that he
would remain unfit for any work.
The defendant’s insurers, Zurich Insurance became suspicious
that he was exaggerating his injuries and in 1999, obtained video
surveillance of him.
Proceedings were subsequently issued in which Hayward alleged he
had sustained a spinal injury and had a depressive disorder.
Eventually in October 2003 the claim was settled for around
£135,000. However two years later further evidence emerged which
suggested that Mr Hayward had made a complete recovery from his
injuries by mid-2002, over a year before settlement.
In 2009 Zurich started fresh legal action against Hayward
seeking damages and alleging that the settlement of the claim in
2003 had been obtained by false representation, and had offered
more in settlement than it would otherwise have done.
Whilst a Deputy District Judge at Cambridge County Court allowed
Zurich’s claim to proceed it was overturned on appeal on the
grounds that there was no material difference between Zurich’s
allegations in both cases and therefore there was no right to
re-visit the issue. However the Court of Appeal disagreed in light
of the fresh evidence presented. The judge also stressed the vital
role of statements of truth which parties must be able to rely upon
in reaching a settlement.
Steven Conway, a partner at Browne Jacobson, commented:
“This is a welcome decision for defendants and their insurers
who are safe in the knowledge that if fresh evidence later comes to
light they will not be prevented by the courts from pursuing
claimants for damages. It also serves as a reminder to those
claimants who make miraculous post-settlement recoveries that they
can still be pursued if they have induced settlement through
deceit.”