Fairclough Homes Limited v Summers

The Supreme Court held that the civil court does have power to strike out a statement of case as an abuse of process under CPR 3.4(2) and by virtue of its inherent jurisdiction even after a trial in which liability and quantum have been determined. However, that power should be exercised only in very exceptional circumstances and subject to a scrupulous examination of proportionality, including Article 6 ECHR considerations. The court emphasised that striking out is a draconian remedy and that in most cases less extreme sanctions (for example costs orders, reductions of interest, referral for contempt or criminal proceedings, and calibrated settlement offers such as Calderbank offers) will be adequate to protect the court’s process and to deter fraud.

Applying these principles, the court concluded that, although the claimant had persistently lied and the claim was tainted by dishonesty, it would not be proportionate to strike out the claim here where liability and damages had been fairly assessed, the judge had drawn adverse inferences and made costs and interest orders, and other remedies (including possible contempt or criminal proceedings) were available.

Background and facts:

• The claimant was injured at work on 13 May 2003 and the defendant admitted liability in October 2003. Proceedings were issued in May 2006. After investigations and surveillance material obtained by the defendant, the claimant was found by the trial judge to have substantially exaggerated his ongoing disability from about March to October 2007 and thereafter; the judge made detailed findings of fact and assessed damages.
• The defendant sought to strike out the whole claim as an abuse of process on grounds of dishonesty once it disclosed surveillance evidence in December 2008, and later sought permission to bring contempt proceedings. The trial on quantum took place in January 2010; judgment on liability had been given in August 2007. The trial judge made adverse findings against the claimant, assessed damages at £88,716.76 (subject to deductions), awarded interest and made costs orders, refused permission for contempt proceedings and recognised the defendant’s argument on strike-out as a point for appeal.

Procedural posture:

• The defendant appealed to the Court of Appeal which, relying on Ul-Haq v Shah and Widlake v BAA, held that the court had no jurisdiction to strike out a genuine claim after trial; that decision is reported at [2010] EWCA Civ 1300 and permission to appeal to the Supreme Court was eventually granted.

Issues before the Supreme Court:

1. Whether the court has power to strike out a statement of case as an abuse of process under CPR 3.4(2) or under its inherent jurisdiction after a trial at which liability and quantum have been determined;
2. If such power exists, in what circumstances it should be exercised; and
3. Whether the present case was one in which the court should exercise that power.

Reasoning and conclusions:

• The court concluded that CPR 3.4(2) and the inherent jurisdiction do confer power to strike out a statement of case for abuse of process at any stage, including after trial, but that as a matter of principle and proportion it should be used only in very exceptional cases.
• The court applied ECHR Article 6 and Article 1 Protocol 1 proportionality considerations and emphasised the availability of alternative and effective sanctions: adverse findings on fact which reduce damages, indemnity costs orders, reduction of interest, Calderbank settlement offers, and criminal or contempt proceedings where appropriate.
• The Supreme Court preferred the approach of Masood v Zahoor to the effect that striking out after trial is a theoretical possibility for exceptional misconduct but is rarely appropriate. It disagreed with the Court of Appeal in Ul-Haq to the extent that the latter held there was no jurisdiction at all.
• Applying those principles to this case, the court held it would be disproportionate to strike out: the claimant had suffered real injury, the judge had properly assessed damages and made costs and interest orders, and further remedies (including possible contempt or criminal proceedings) were available; substantial deductions from the award meant the claimant was unlikely to receive much net benefit.

(i) Relief sought: the defendant sought an order striking out the claimant’s claim as an abuse of process; the claimant sought damages and resisted strike-out.

(ii) Issues framed by the court: jurisdiction to strike out under CPR 3.4(2) and inherent jurisdiction after trial; the appropriate standards for exercising the power; proportionality under ECHR; application of those standards to the facts.

(iii) Concise account of reasoning: see points above — jurisdiction exists but is to be sparingly exercised; alternative sanctions normally suffice; in this case strike-out would not be proportionate.

This was an appeal by the defendant seeking to strike out the claimant’s claim. The Supreme Court held that the court does have jurisdiction under CPR 3.4(2) and its inherent jurisdiction to strike out a statement of case for abuse of process even after trial, but that the power should be exercised only in very exceptional circumstances. Applying those principles, the court concluded it would not be just or proportionate to strike out the claim in this case and therefore refused the defendant’s application; the judge’s assessment of liability and damages and his orders on interest and costs were left in place.

First instance: trial before His Honour Judge Tetlow (judgment 23 February 2010). Appeal to the Court of Appeal (reported at [2010] EWCA Civ 1300) which, relying on Ul-Haq v Shah and Widlake v BAA, held that strike-out after trial was not permissible. Permission to appeal to the Supreme Court was granted and the appeal was heard before the Supreme Court (decision [2012] UKSC 26).