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The Supreme Court has considered whether a court can strike out a claim tainted by fraud as an abuse of process, after a trial at which the court has held that the Defendant is liable to the Claimant and damages have been assessed.

The Supreme Court held that the court does have the power to strike out a claim for abuse of process at any stage of the proceedings, even when it has already determined liability and quantum.  However, this power should only be exercised where it is just and proportionate to do so, which is likely to be only in very exceptional circumstances. 

The court’s power to strike out a statement of case as an abuse of process

Under CPR 3.4(2), the court may strike out a statement of case if:

(a) the statement of case discloses no reasonable grounds for bringing or defending the claim;

(b) the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings; or

(c) there has been a failure to comply with a rule, practice direction or court order. 

The court also has the power to strike out a statement of case under its inherent jurisdiction.  This power is specifically preserved by CPR 3.4(5). 

There is no definition of “abuse of process” in the CPR.  However, it has been explained as “using that process for a purpose or in a way significantly different from its ordinary and proper use” (Attorney General v Barker (2000)).  Examples of where proceedings will constitute an abuse of process include proceedings which attempt to re-litigate decided issues, proceedings which have been issued but which the Claimant has no intention of pursuing and proceedings where the benefit attainable by the Claimant is of such limited value that the costs of the litigation will be out of all proportion. 

The facts and first instance decision

Summers was previously employed by Fairclough.  He was injured in an accident at work and brought a claim against Fairclough alleging breach of duty or negligence.  The trial judge gave judgment in Summers’ favour on liability, with damages to be assessed. 

After the trial, Summers served a schedule of loss totalling nearly £840,000.  The schedule included a signed statement of truth and claimed, amongst other things, that Summers needed to use crutches outside, that he needed to wear an ankle brace at all times, that his standing and sitting were limited due to pain, that he had not worked since the accident and that he was unlikely to work for the foreseeable future.    

However, Fairclough had obtained images of Summers by undercover surveillance which contradicted these claims.  Consequently, Fairclough alleged that Summers’ claim was grossly and dishonestly exaggerated and asserted that it should be struck out in its entirety on the ground that it was tainted by fraud and was an abuse of process.  The Department of Work and Pensions which had been making disability payments to Summers also disclosed surveillance showing Summers apparently working without difficulty and extracts from the diary of Summers’ wife were disclosed which appeared to show him working and playing football.  Summers subsequently served an amended schedule of loss totalling just over £250,000. 

Following a trial on quantum in January 2010, the trial judge found that “The evidence before me is sufficiently cogent to sustain a claim of fraud not only applying the civil standard of being satisfied on the balance of probabilities but also on the criminal standard of being satisfied beyond reasonable doubt“.  Nevertheless, the judge found that he did not have the power to strike out Summers’ case as an abuse of process and awarded Summers damages of over £88,000.

The trial judge held that he was bound by the Court of Appeal decisions in Ul-Haq v Shah (2009) and Widlake v BAA Limited (2009).  These cases both involved claims that were tainted by fraud: in the Ul-Haq case, two Claimants had genuine claims but had supported another Claimant’s fictional claim and in the Widlake case, the Claimant had dishonestly exaggerated her claim.  In both cases, the Court of Appeal held that the court did not have the power to strike out the claims as an abuse of process.  In Ul-Haq, Lord Justice Toulson held that:

“where a statement of case contains a mixture of false and genuine claims…I cannot see that the inclusion of a false claim would or could of itself turn a genuine claim (or genuine part of a claim) into being an abuse of the court’s process, so as to warrant the court striking it out under CPR 3.4(2)(b).  To hold otherwise would be to deprive a claimant of his substantive rights in respect of an accrued cause of action as a mark of the court’s disapproval of his conduct in advancing, or supporting, a false claim…which in my judgment the court has no power to do.”

The Court of Appeal decision

Fairclough appealed against the trial judge’s decision.  However, the Court of Appeal also held that it was bound by Ul-Haq and Widlake and similarly refused to strike out Summers’ case as an abuse of process.  Fairclough therefore appealed to the Supreme Court.

The Supreme Court’s decision

The Supreme Court held that, notwithstanding the decision of the Court of Appeal in Ul-Haq, the court does have jurisdiction to strike out a claim under CPR 3.4(2) for abuse of process, even after a trial at which the court has determined liability and quantum. 

The Court held that the language of CPR 3.4(2)(b) supports the existence of a jurisdiction to strike out a claim for abuse of process even where to do so would defeat a substantive claim.  To deliberately make a false claim and to adduce false evidence is an abuse of process and it follows from the language of the CPR that in such a case the court has the power to strike out the claim.  There is nothing in the rule to qualify the power: it does not limit the time when an application for such an order must be made nor the circumstances in which it can be made.  The only restriction on the power is that contained in CPR 1.1 and 1.2 that the court must decide cases in accordance with the overriding objective of determining cases justly.

However, the Supreme Court held that the draconian step of striking out a claim is always a last resort, particularly where to do so would deprive the Claimant of a substantive right to which the court has held after a trial that he is entitled.  The test in every case must be what is just and proportionate and only in very exceptional circumstances will it be just and proportionate for the court to strike out a claim after a trial. 

On the facts of the case, the Court held that Summers had persistently maintained his claim on a false basis and that this was a serious case of abuse of process.  However, the Court held that this was not an appropriate case in which to strike out the claim instead of giving judgment for Summers.  It would not be just or proportionate to do so and therefore it would be wrong in principle to do so.  As a matter of substantive law, Summers had suffered significant injury as a result of Fairclough’s breach of duty and he was therefore entitled to damages.   

Comment

Although the Supreme Court found that the court does have the power to strike out a claim tainted by fraud as an abuse of process, after a trial at which the court has held that the Defendant is liable to the Claimant and damages have been assessed, the Court has limited the ability of the court to do so by holding that the power should only be exercised in very exceptional circumstances. 

The Supreme Court stated that such “very exceptional circumstances” might include a case where there had been a “massive attempt to deceive the court but the award of damages would be very small“.  However, beyond this, the Court did not give any guidance as to what constitutes “very exceptional circumstances” which would justify striking out a claim tainted by fraud as an abuse of process.  Indeed, the Court went so far as to say that “it is very difficult indeed to think of circumstances in which such a conclusion would be proportionate.” 

One of the arguments made by Fairclough was that unless fraudulent claims are struck out, dishonest Claimants will not be deterred.  The Supreme Court accepted that fraudulent claims should be deterred.  However, it was of the view that in most cases this could be sufficiently achieved by means such as drawing inferences against the Claimant, ensuring that the dishonesty does not increase the award of damages, making orders for costs, reducing interest, proceedings for contempt and criminal proceedings.

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