The employee in this UK Court of Appeal case had an accident at work in which he injured his back. Some three years later he took proceedings for personal injuries. In his Schedule of Special Damages he claimed just under £420,000: that did not include damages for pain and suffering and some other unquantified losses.

The employer's insurers queried the quantum, although not the liability for damages. They thought that the Appellant had exaggerated the consequences of his injury and used video evidence to show him doing some heavy duties after his apparent injury. Nonetheless, before the case was heard, the case was settled and the Appellant received £134,973.11 in full and final settlement of his claim. So far, so typical.

Some two years later, neighbours of the Appellant claimed he had behaved fraudulently and had actually recovered from his injuries before settling the claim. Had the employer's insurance company settled because the employee had deceived them? If true, should he be made to repay the monies? Just as importantly, could the employer (or their insurance company in this case) rely on information after a settlement has been reached? Not according to the E&W Court of Appeal:

"The result is that the settlement in the original action remains binding and the judgment of [County Court] Judge Moloney must be set aside. The result is unattractive because it means that the Appellant retains the benefit of a settlement far in excess of the value of his actual loss, though I dare say somewhat reduced by the incidence of costs in these protracted proceedings. But there is a wider principle at stake, that parties who settle claims with their eyes wide open should not be entitled to revive them only because better evidence comes along later."

This judgement seems at first blush to be harsh and unfair - that a person who at best wilfully exaggerated their injuries should keep the higher sum (he had been awarded only £14k at County Court before this appeal). However, the employers were not deceived by the Appellant - they did not believe him. Indeed, they had video evidence contradicting his story before they settled. They did not settle the case because they believed him. They settled the case because they were concerned that the court might believe his story. That, in law, is not deception - you can't be deceived if you don't believe and, whilst the lies might 'influence' a person's decision to settle, it does not amount to deception.

Underhill LJ's reasoning covers the position well:

"It seems to me clear that in such a case a defendant will not be entitled to seek to have the agreement set aside at some later date only on the basis that he can (now) show that the claimant's factual statements of the case being advanced were wrong (or, to use the technical language, "false"). In deciding to settle the defendant takes the risk that those statements are in fact untrue (or, to put it more accurately, would not be proved at trial) and pays a sum commensurate with his assessment of that risk. He could have taken the case to trial in order to disprove the statements in question; but by settling he agrees to forego that opportunity and he cannot reserve the right to come back later for another attempt. If it were otherwise no settlement would be final."
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