The Supreme Court is to hear an insurer’s attempt to overturn a decision which allowed a claimant to keep a settlement despite evidence later emerging that he had been dishonest.

The court yesterday granted permission to appeal in Hayward v Zurich Insurance Company PLC after the insurer contested a Court of Appeal decision in March.

In the ruling, Lord Justice Underhill said that Zurich had finalised the £135,000 out-of-court settlement with ‘eyes open’ and said the award should stand because of the ‘wider principle’ of finality of settlements.

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

Despite Zurich obtaining video surveillance which appeared to suggest the claimant was exaggerating his inury, the parties reached an agreement in a full and final settlement.

When further evidence emerged that Hayward had recovered entirely from his injury a year before the settlement, the insurer started 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.

Underhill said: '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.’

That principle will now come under scrutiny in the Supreme Court, with the hearing likely to be later this year.

Zurich contended 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 said it was obliged to settle because its own expert was not fully persuaded that Hayward was being deceitful and so the court might be disposed to believe him.