Fairclough Homes Limited v Summers

A civil court may strike out a statement of case for abuse of process at any stage, including after a fair trial has established liability and quantified damages. The power arises under the Civil Procedure Rules 1998 and the court’s inherent jurisdiction.

After trial, however, striking out a genuine claim is a last resort. It is justified only in very exceptional circumstances where forfeiture of determination is just and proportionate. Ordinarily the court should determine the genuine claim, draw proper adverse inferences, impose appropriate costs and interest consequences, and leave contempt or criminal proceedings available to address fraud. The power protects the court’s process; it does not punish the claimant or confer a windfall on the defendant.

The respondent suffered significant injury in an accident for which his employer admitted liability. He nevertheless persistently and dishonestly exaggerated his continuing disability and loss in pleadings, schedules and evidence verified by statements of truth. After trial, the judge found fraud proved but assessed genuine damages at £88,716.76 before deductions. Bound by authority, he declined to strike out the claim.

The Court of Appeal, in Fairclough Homes Limited v Summers [2010] EWCA Civ 1300, held that Ul-Haq v Shah and Widlake v BAA Limited required the same result. The Supreme Court granted permission to appeal. The issues were whether a civil court could strike out for abuse after trial despite established liability in an ascertained sum and, if so, when it should exercise that power.

1. Appeal dismissed. The court had jurisdiction under rule 3.4(2)(b) of the Civil Procedure Rules 1998, and under its inherent jurisdiction, to strike out a statement of case for abuse at any stage. The rule contains no temporal restriction and may apply even after a fair trial has established liability and quantified damages. The contrary jurisdictional approach in Ul-Haq v Shah [2009] EWCA Civ 542 was not followed; the approach in Masood v Zahoor [2009] EWCA Civ 650 was preferred.

2. The power may extinguish substantive rights, but its purpose is to protect the court’s process rather than punish a dishonest claimant. At the end of a trial it should be exercised only where the abuse has caused the claimant to forfeit the right to determination. That will be a very rare case, particularly where the court can fairly assess liability and quantum.

3. Exercise of the power must be just and proportionate. Article 6 of the European Convention on Human Rights protects access to a court, although that right permits proportionate limitations pursuing a legitimate aim. An established judgment is also a possession for Article 1 of Protocol 1 purposes. The court must therefore scrutinise the circumstances before depriving a claimant of an adjudicated entitlement.

4. Striking out is a last resort. In the vast majority of dishonest or exaggerated claims the court should decide the genuine claim, prevent dishonesty from increasing damages and draw all proper adverse inferences. It may impose indemnity costs for expense caused by fraud, reduce interest, consider a Calderbank offer, permit contempt proceedings or refer the matter for prosecution. These measures can deter fraud without relieving a defendant of substantive liability.

5. The respondent’s persistent dishonesty was a serious abuse. Yet he had suffered significant injury through the appellant’s breach and remained substantively entitled to assessed damages. Striking out would not be just or proportionate. The decision did not affect early applications to prevent wasted resources, or cases in which fraud taints the whole claim.

1. United Kingdom Supreme Court: In Fairclough Homes Limited v Summers [2012] UKSC 26, the court held that jurisdiction to strike out existed but dismissed the appeal because exercise of the power was not just or proportionate.
2. Court of Appeal: In Fairclough Homes Limited v Summers [2010] EWCA Civ 1300, the court held itself bound by Ul-Haq v Shah and Widlake v BAA Limited to hold that the entire claim could not be struck out. It refused permission to appeal.
3. County Court: His Honour Judge Tetlow found that the respondent had dishonestly exaggerated his claim, but assessed genuine damages at £88,716.76 before deductions. Bound by Court of Appeal authority, he did not strike out the claim and granted permission to appeal.