Fraudulent claims; Hayward’s claim goes Wayward: Case Analysis of Hayward v Zurich Insurance Co PLC [2016] UKSC48

The recent 2016 case of Hayward v Zurich Insurance Co PLC [2016] UKSC48 considered whether an insurer can use the law of misrepresentation to successfully appeal a personal injury settlement, where there had been a suspicion of fraud.

In 2003, the Appellant’s Zurich, Mr Hayward’s employer’s insurer settled a personal injury claim suffered in the workplace by Mr Hayward for £134,973.11, despite the fact that Zurich suspected Mr Hayward of exaggerating his injuries.

At the time of the settlement in October 2003, the insurer had video evidence of exaggeration. By February 2009, the insurer had gathered further evidence showing that Mr Hayward had fully recovered a full year before the settlement. It sought to set aside the settlement and claimed damages for deceit.

Mr Hayward applied for summary judgment on the basis that the claim had already been compromised in the previous proceedings. His application for summary judgment or strike-out was successful before the County Court, but overturned by the Court of Appeal. The insurer’s claim was therefore allowed to proceed.  On the claim itself, the Judge found that Mr Hayward had deliberately exaggerated the effects of his injury, set aside the settlement agreement, and awarded Mr Hayward a much reduced sum of £14,720. A second Court of Appeal allowed Mr Hayward’s appeal, holding that the insurer could not be allowed to set aside the settlement agreement since it was aware of Mr Hayward’s fraud at that time.

The Supreme Court unanimously allowed the insurer’s appeal, reinstating the Judge’s conclusion that the settlement agreement should be set aside and that Mr Hayward be paid the reduced sum.  The Supreme Court found that the insurer did not know that the respondent had deliberately exaggerated his injuries to the extent that was later discovered. It was found that the insurer had done everything it could to investigate. The fact that the insurer was aware that there may have been some misrepresentation did not prevent the finding that Mr Hayward’s fraud had induced the insurers to enter into the settlement.


The ramifications of this decision are considerable for insurers; Plaintiff’s guilty of exaggerating insurance claims may be pursued after any agreed settlement should they later be exposed as fraudulent. It appears where new evidence becomes available, exposing misrepresentations, an insurer is not precluded from revisiting settled claims where they may have had suspicions at the time settlement but made an economic decision.


To read the full Supreme Court decision please click here



While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.