Hayward (Respondent) v Zurich Insurance Company plc (Appellant)

The Supreme Court of the United Kingdom considered an appeal brought by Zurich Insurance Company Plc (Zurich) against a decision of the Court of Appeal in Hayward (Respondent) v Zurich Insurance Company plc (Appellant). The issue in the appeal was whether a settlement agreement between Mr Hayward and Zurich could be set aside on the basis of fraudulent misrepresentation where Zurich had suspected that the claim was fraudulent at the time of the settlement. The Court of Appeal had previously held that the settlement could not be set aside because Zurich had not believed the misrepresentations to be true. The Supreme Court allowed the appeal and held that it was sufficient to establish influence that the fact of the misrepresentations was a material cause of the settlement. The Court also held that mere suspicion of exaggeration for financial gain on the part of the claimant did not preclude unravelling the settlement of that disputed claim when fraud was subsequently established. The Supreme Court's decision restored the order of the County Court judge that the settlement agreement be set aside and that Mr Hayward repay the amount paid under the settlement less the damages awarded to him.