Zurich wins right to appeal against £135,000 dishonest settlement case

The Supreme Court has paved the way for Zurich to appeal against a lower court decision that allowed a claimant to keep a £135,000 settlement despite evidence later emerged that he had been dishonest.

The court has granted the insurer permission to appeal in the case Hayward v Zurich Insurance Company plc.

Zurich had contested a Court of Appeal decision in March that ruled the insurer had finalised the £135,000 out-of-court settlement with “eyes open”, adding that the award should stand because of the “wider principle” of finality of settlements.

That principle is expected to be one of the areas that will be focused on at the Supreme Court hearing, likely to be later this year, the Law Gazette reports.

Hayward received the damages in 2003 after claiming for back injuries after an accident at work in 1998.

Zurich obtained video surveillance evidence that appeared to suggest he was exaggerating his injury; however the parties reached an agreement in a full and final settlement.

But further evidence later emerged that Hayward had recovered fully from his injury a year before the settlement.

This prompted Zurich to start proceedings claiming damages for deceit.

In 2013, the High Court cut Hayward’s damages to £14,720, but the Court of Appeal restored his original settlement.

Zurich argued that Hayward’s “misrepresentations” about the effects of his injury had caused it to settle because the insurer feared he would be believed in court.

The insurer added it was obliged to settle because its own expert was not sure that Hayward was being deceitful and so the court might be disposed to believe him.