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Zurich Insurance Co Plc v Colin Richard Hayward, CA, 27/05/11


An action by an insurance company alleging that the settlement of an earlier PI action was obtained by fraud and/or misrepresentation should not have been struck out.

An insurance company appealed against a decision to strike out its claim for fraud and/or misrepresentation following the settlement of a personal injury action. Following settlement, new information came to light that the Claimant had made a complete recovery a year before settlement. It was held that a consent order created an estoppel if the parties to the second action were the same as the parties to the first and the issues raised in the second action were necessarily compromised in the first action. Although an allegation that a disability was being exaggerated for gain amounted to fraud and that allegation of fraud was similar to the allegation made in the second action, it was not the same allegation and it was not clear exactly what was compromised in the first action. The insurance company was not estopped from alleging that the settlement was obtained by fraud. The second action was not an abuse of process. Finality of litigation was desirable for many reasons but in the context of the instant case the principle was designed to protect a litigant from being vexed more than once by the same allegations. The public interest in the integrity of the administration of justice and the private interests of the insurance company in seeking the investigation of the allegations of fraud far outweighed the public interest in the finality of litigation and the Defendant's wish to avoid a second action (per Smith LJ).

In determining relief from sanctions the court should not apply a formulistic approach.


  • Court of Appeal (Civil Division)
  • Friday, 01 July 2011