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Supreme Court to decide whether insurers can reopen settlements made with “eyes wide open”

Supreme Court: permission granted [1]

Supreme Court: permission granted

The Supreme Court is to rule on whether an insurer can reopen a settled case to revive an allegation of fraud.

The court announced yesterday that it had granted Zurich Insurance permission to appeal the Court of Appeal’s decision in Hayward v Zurich Insurance Company [2015] EWCA Civ 327 [2].

Lord Justice Underhill, delivering the leading judgment, ruled that “parties who settle claims with their eyes wide open should not be entitled to revive them only because better evidence comes along later”.

Citing new evidence, Zurich argued that a claimant’s statements on the extent of his back injury and accounts given to medical experts constituted fraudulent misrepresentation. The insurer had, almost six years earlier, settled the case.

However, Underhill LJ said: “It cannot be right that a defendant who has made an allegation of fraud against the claimant but decided in the end not to have it tested in the court should be allowed, whenever he chooses, to revive that allegation as a basis for setting aside the settlement.

“It may stick in the throat that the claimant can retain the reward of his dishonesty, but the defendant will have made the deal with his eyes open to the possibility of fraud, and there is an important public interest in the finality of settlements.”

The full details of the ruling can be found in our original story here [3].