“Fraud unravels all” confirmed by the Supreme Court

Posted on: August 9th, 2016

In a welcome outcome for victims of fraud, on 27 July 2016 the Supreme Court handed down judgment in the appeal in Hayward (Respondent) v Zurich Insurance Company Plc (Appellant) [2016] UKSC 48 (see our previous post for the background: http://www.pcblitigation.com/media/does-fraud-unravel-all/), unanimously ruling that the insurer’s appeal should be allowed, the settlement agreement should be set aside and Mr Hayward should be paid a reduced sum. Given that it could not fairly be said that the insurer had full knowledge of the facts, the lead judgment by Lord Clarke stated that he could not “allow Mr Hayward to retain moneys which he only obtained by fraud” as “Mr Hayward knew, Zurich was settling on false basis”. Indeed, “[i]t is difficult to envisage any circumstances in which mere suspicion that a claim was fraudulent would preclude unravelling a settlement when fraud is subsequently established”.