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Cashing in on the travel bug: court offers further guidance on costs for group action claims

Posted: 09/11/2016

Following the introduction of the Jackson Reforms and the implementation of fixed costs, some claims management companies have focused their sights on illness and sickness claims arising from holidays abroad. Spanish hoteliers acknowledged a massive increase in the number of claims last summer, with claims management representatives actively targeting British holidaymakers in resort. Whilst these claims are usually low in value, group actions can often result in spiralling legal fees. The Senior Court Costs Office has recently given guidance regarding the assessment of costs for one such case which involved 599 claimants.

The claimants sought compensation for personal injury and loss of enjoyment of their holidays against the tour operator First Choice Holidays and Flights Limited. A total of 447 of the named claimants contracted gastrointestinal illnesses of varying seriousness and duration. The remaining 152 endured substandard accommodation and service which ruined their holidays.

The Costs Office was asked to consider the claimants’ application for an interim payment of costs. At that time, the defendant had already paid £1.8 million for costs and the claimants’ solicitors were applying for a further interim payment on account.

Master James of the Senior Courts Costs Office concluded that the claimants had failed to keep their costs to a reasonable and proportionate level. The average award per claimant was below £3,000, and the litigation comprised many straightforward, low value claims with a small proportion of higher value claims. Furthermore, the defendant’s robust defence did not constitute bad conduct on its part.

The Master also ruled that the 152 claimants who did not suffer illness should have pursued their claims via the Association of British Travel Agents (ABTA) scheme. Although the ABTA mediation scheme is voluntary, it was noted that it covered non personal injury claims of up to £25,000 per booking. If the relevant claimants had made use of the scheme, 152 claims would have been resolved at a cost of £40,000 rather than the £456,000 of costs claimed. It was therefore neither reasonable nor proportionate to incur such costs by pursuing those matters in the group litigation. The court ordered that the maximum the defendants should have to pay in respect of each of those claims was the ABTA fee.

It was also held that there was no need for a further interim costs payment since the defendant had already paid a reasonable sum on account of costs.

This decision will offer a small degree of solace to embattled UK tour operators and foreign hoteliers as they consider how best to respond to the surge in illness claims.

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