## Facts

- Mr. Hayward, employed by Zurich Insurance, suffered a back injury at work and claimed damages, significantly exaggerating his disability.
- Zurich Insurance, despite doubting the extent of his injuries but lacking concrete proof, entered into a substantial settlement with Mr. Hayward.
- Subsequent video evidence revealed Mr. Hayward’s actual physical capabilities, showing his earlier claims were untrue.
- Zurich then sought to set aside the settlement on the basis of Mr. Hayward’s misrepresentations.

## Issues

1. Whether inducement for misrepresentation requires proof of actual reliance, even when the misled party questioned the statement’s accuracy.
2. Whether skepticism or disbelief in the truthfulness of a statement necessarily precludes a finding of reliance for the purpose of rescinding a contract or settlement.

## Decision

- The Supreme Court ruled in favour of Zurich Insurance, allowing the settlement to be set aside due to Mr. Hayward’s misrepresentation.
- The Court held that actual reliance is a question of fact, and a party may rely on a misrepresentation even if it doubted its truth, provided that the misrepresentation materially influenced the decision to enter into the settlement.
- Skepticism about the truth of the misrepresentation is not, by itself, enough to defeat a claim for inducement if the statement materially influenced the party’s action.

## Legal Principles

- Inducement in misrepresentation requires proof of actual reliance as a factual issue.
- Skepticism about a misrepresentation does not preclude a finding of reliance, unless the party had conclusive evidence disproving the statement and proceeded regardless.
- The principle from Redgrave v Hurd (1881) 20 Ch D 1 is reaffirmed: failure to verify a statement does not eliminate the right to rescind for misrepresentation, and skepticism does not necessarily negate inducement.
- The ruling applies particularly to fraudulent misrepresentation claims, clarifying that doubt is not a bar to establishing reliance if the misrepresentation was a material influence.

## Conclusion

The Supreme Court in Hayward v Zurich Insurance Co Ltd confirmed that actual reliance is required to establish inducement in misrepresentation claims, even where the misled party is skeptical about the statement’s truth, as long as the misrepresentation materially influenced the decision to contract or settle.


Hayward v Zurich Insurance Co Ltd [2016] UKSC 48