It has today been confirmed that Fixed Recoverable Costs will now also be extended to Holiday Sickness Claims.
The Government requested that the Civil Procedure Rule Committee reviewed the position last year to look at bringing Holiday Sickness Claims within the Fixed Recoverable Costs Regime, following the Travel Industry’s Campaign for review, similar to that of the Motor Industry with Whiplash Claims.
Ministers have described this as an “epidemic of litigation” and that they believe that the uncontrolled, and mainly unchallenged, legal costs in this area have encouraged out of Court settlements by Operators to avoid escalating legal costs. Therefore, as of Monday, the Civil Procedure Rules will be amended to bring Holiday Sickness Claims in line with other Personal Injury Claims.
Justice Minister Rory Stewart said:
“This damages the travel industry and risks driving up costs for holidaymakers. This behaviour also tarnishes the reputation of British people abroad. That is why we are introducing measures to crack down on those who engage in this dishonest practice.”
Defendants will now pay prescribed costs in line with existing costs for Employment and Public Liability claims, depending on the value of the claim and length of the Proceedings:
- If settlement is agreed between £1,000 and £5,000, fixed costs are £950 and 17.5% of the damages.
- For claims worth up to £10,000, this increases to £1,855 and 10% of the damages over £5,000.
- Where claims exceed £10,000 in value, Claimant Solicitors can claim £2,370 and 10% of damages over £10,000.
If the claim is agreed at Trial, costs are fixed at £3,790 plus 27.5% of the damages agreed or awarded and the Trial Advocacy fee.
The result of the changes make Defence costs predictable, and assists in challenging fraudulent claims.
In turn, the Law Society has urged the Government not to restrict genuine claims in efforts to clamp down on fraud and said Insurers should not pay out on claims which are either fraudulent or which lack legal merit.
The changes are expected to come into force in the coming weeks.