Hayward v Zurich Insurance [2016] UKSC 48

KEY POINTS

• To establish a claim for deceit on grounds of misrepresentation, the claimant must prove the following elements:

  1. The defendant made a false misrepresentation that was material;

  2. The misrepresentation was made with an intention to induce the contract, and it did induce the contract;

  3. The claimant suffered a loss as a result of the misrepresentation.

• To establish the necessary influence or reliance on a fraudulent misrepresentation for a claim to invalidate a settlement, the defrauded party (such as the insurer in this case) is not required to demonstrate that it settled due to a belief in the truth of the misrepresentation.

• The misrepresentation needs to be a material cause of the contract, but not necessarily the only cause.

FACTS

• Mr. Hayward suffered an injury at work in June 1998 and brought proceedings against his employer, who admitted liability.

• He dishonestly exaggerated the extent of his injury to obtain a higher settlement figure of £134,973.11 from the employer's liability insurer, the appellant.

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

COMMENTARY

• The recipient of a misrepresentation is not obligated to exercise caution or diligence in accepting or verifying the statement.

• The fact that the claimant conducts their own investigations does not necessarily imply that they did not rely on the misrepresentations.