Fixed Costs In Illness Claims – Scope Finally Announced!

Fixed Costs In Illness Claims – Scope Finally Announced!

We here at Travlaw have been monitoring this for quite some time now, but today has finally seen the long expected announcement from the Government on the future of illness claims

Looking at things, as we do, from a Defendant travel company point of view, we wanted to take the opportunity to bring together the actual facts that are known at this time. Actual detail has been short in supply, but we do now have at least some idea about the future in this controversial area.

Firstly, some early reports of this news today were from ABTA,

https://abta.com/about-us/press/abta-welcomes-closure-of-legal-loophole-which-has-given-rise-to-false-sickn

http://www.travelweekly.co.uk/articles/301725/abta-welcomes-government-announcement-on-package-holiday-sickness-claims

https://www.ttgmedia.com/news/government-finally-closes-sickness-claims-loophole-13844

 

The actual announcement from the Government is here:

https://www.gov.uk/government/news/new-curbs-on-bogus-holiday-sickness-claims

 

The most detail at the time of writing is summarised in the Law Society Gazette article here:

https://www.lawgazette.co.uk/news/moj-confirms-fixed-costs-figures-for-holiday-sickness-claims/5065661.article

 

The most important detail in our view is that (as expected) the costs travel companies will have to pay will be in line with claims in other industries where fixed costs apply. This would therefore mean that the following is what we expect to see:

If Claims Are Settled

 

  • Claims where the damages value is between £1,000.00 and £5,000.00 – Fixed claimant lawyer costs of £950.00 + 17.5% of the damages;
  • Claims where the damages is between £5,000.00 and £10,000.00 – Fixed claimant lawyer costs of £1,855.00 and 10% of the damages over £5,000.00;
  • Where damages exceed £10,000 in value, the claimant lawyers can claim £2,370.00 and 10% of damages over £10,000.00.

If Claims Proceed To Trial

If the claim gets all the way to trial, and the Claimant wins, the claimant costs will be fixed at £3,790.00 plus 27.5% of the damages agreed or awarded and the trial advocacy fee (which has a sliding scale of between £500.00 and £1,710.00 + VAT).

Our experience is that most claims for gastric illness fall into that lower band of being between £1,000.00 and £5,000.00, and claimant costs (and therefore the overall cost of such claims) will therefore fall into the lower costs bracket also.

Ultimately, the overall news for the travel industry is that this is very positive news, as along with the fantastic work being done in other areas (of which Travlaw are delighted to have played some role in) this really is a “game changer” in terms of what the gastric illness claims landscape will be. The only note of warning is that we do expect claimants do issue as many claims as possible before the new rule comes in (said to be “before the summer season”) so as to avoid the new fixed costs and instead have the current costs regime.

For more information please contact: Matt@Travlaw.co.uk, Stephen@Travlaw.co.uk or Krystene@Travlaw.co.uk

The Travlaw Team

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